Employment Rights Bill (Sixth sitting)
Greg Smith ExcerptsTuesday 3rd December 2024
(2 weeks, 6 days ago)
Public Bill CommitteesRead Full debate Employment Rights Bill 2024-26 View all Employment Rights Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 3 December 2024 - (3 Dec 2024)
Justin Madders
Amendment 11 will introduce a duty on employers to inform workers when an exemption applies and the employer is exempt from their obligation to offer a worker a guaranteed hours contract. Any exemptions to the duty to offer guaranteed hours will be defined in regulations.
Amendment 11 will also introduce a duty on employers to inform workers where an offer of guaranteed hours already given is to be treated as withdrawn because a relevant termination has taken place. That will ensure that workers are aware of when they are not receiving a guaranteed hours offer because an exemption applies. It will allow workers to check that the exemption is applicable to them, and then enable them to enforce their right to guaranteed hours where an exemption is not applicable.
Associated consequential amendments 14, 19 and 44 will ensure that workers will be able to take a complaint to an employment tribunal if the worker is not provided with a notice of exemption or a notice of the withdrawal of an offer already made. That will also be the case where a notice has been provided but should not have been, or where a notice has been provided but cites the wrong exemption.
Amendment 13 will introduce a new duty on employers that will ensure that workers who would likely qualify for a guaranteed hours offer are aware of certain information about the right to guaranteed hours. That will help to ensure that workers are informed about the new right and can therefore take decisions about their working hours during their reference period based on the information they receive about their possible right to a guaranteed hours offer.
Further consequential amendments 15, 23 and 45 have been made to ensure that a worker may enforce their right to be informed about the right to a guaranteed hours offer by taking a complaint to an employment tribunal. A consequential amendment 20 has been made to define the period within which a complaint of this nature may be taken to a tribunal. I think we might get to that later in relation to the general application of extended time limits.
Greg Smith (Mid Buckinghamshire) (Con)
It is a pleasure to serve under your chairmanship, Mr Stringer. As a precursor to my comments on these specific amendments, I note that the sheer volume of Government amendments that we are considering really goes to show that the Bill might have met a political objective in being published in 100 days, but that it was not ready to be published in those 100 days. At worst, that is a discourtesy to the House and, at best, it shows that the legislation simply has not been drafted properly. These changes simply would not have been necessary had due diligence been done on the Bill before it was published.
I would like to focus on amendment 13 from this group of amendments. That amendment requires employers to give their employees access to certain information to be specified in regulations—we are back to our old friend of regulations to come. Let me ask the Minister the following: what information will amendment 13 require employers to make available? Why? And what further burden will be imposed later down the line by regulations, thanks to the power taken in the clauses? Employees will be able to take their employer to a tribunal for not providing this information, as provided for in amendment 15, so I suggest to the Committee and the Minister that it is vital that we can understand the requirements that the clause will place on employers.
Justin Madders
I am grateful for the shadow Minister’s questions. No doubt during the passage of the Bill we will come back on several occasions to that point about the number of amendments. I just place on record my gratitude to the civil service and the Office of the Parliamentary Counsel for their work in getting the Bill published to the parliamentary deadline that was politically set. Of course, lots of Bills have amendments as they progress. As is consistent with our wish to engage thoughtfully, we may still have further amendments.
As for the shadow Minister’s questions, it is entirely usual to put that sort of detailed information in regulation, and we would not normally specify it in a Bill. We are trying to ensure that workers who are captured by the zero-hours legislation are aware that they are captured by it and are entitled to certain rights, such as the offer of a guaranteed hours contract. This is about making sure that some of the most vulnerable people in society, who are often exploited by zero-hours contracts, are at least given the information to ensure that their rights are enforced. We will work with businesses and employers, and representatives and trade unions on the precise detail of the information to be provided, but this is about making sure that all parties are aware of their legal obligations. I hope that the shadow Minister understands that this is an important part of the legislation.
Amendment 11 agreed to.
Justin Madders
I beg to move amendment 12, in clause 1, page 8, leave out lines 8 and 9 and insert—
“(6) For the purposes of subsection (3)(c) (and subsection (4)(b), which applies subsection (3)(c))—
(a) subsection (8) of section 27BB (when it is reasonable for a worker’s contract to be entered into as a limited-term contract) applies as it applies for the purposes of that section;
(b) it is to be presumed, unless the contrary is shown, that it was not reasonable for the worker’s contract to have been entered into as a limited-term contract if the work done by the qualifying worker under the worker’s contract was of the same or a similar nature as the work done under another worker’s contract under which the qualifying worker worked for the employer—
(i) where the period in question is the relevant reference period, during that period;
(ii) where the period in question is the offer period, during that period or the relevant reference period;
(iii) where the period in question is the response period, during that period, the relevant reference period or the offer period.”
This amendment adds a rebuttable presumption to the existing provision made by proposed section 27BD(6) of the Employment Rights Act 1996. The presumption will apply when determining whether there has been a relevant termination for the purposes of that section such that the duty to make a guaranteed hours offer does not apply or a guaranteed hours offer that has been made is to be treated as withdrawn.
The amendment will close a potential loophole that could mean that workers might not be entitled to a guaranteed hours offer if they are employed on a series of limited-term contracts to undertake the same or similar work. It will do that by adding a rebuttal presumption, that it will not be considered reasonable to have entered into a limited-term contract where a worker undertook work that was the same or similar in more than one contract during the relevant period. That means that the relevant termination provisions would not apply and the employer would not be excepted from its duty to offer guaranteed hours. An employer would have to offer guaranteed hours to the worker, even if that worker’s last contract was terminated at the end of the relevant period, unless it was reasonable for the employer to have entered into a limited-term contract with the worker and the presumption is rebutted, which could then lead to a relevant termination.
Under proposed new section 27BB(8) of the Employment Rights Act 1996—as referred to in the amendment—it is “reasonable” for an employer to enter into a limited-term contract with a worker if the worker is needed only to perform a specific task and the contract will end when it is performed; if the worker is needed only until some event occurs and the contract will then end; or if the worker is needed only for some other temporary need to be specified in regulations.
To be clear, whether it is “reasonable” for the employer to enter into a limited-term contract during the relevant periods affects only whether the right to guaranteed hours applies. If such a contract is not “reasonable”, it is still a lawful contract and may, of course, be an acceptable means of conducting business. As such, the presumption introduced by the amendment would apply only to determine whether there was a relevant termination of a limited-term contract, where a worker is engaged on a series of limited-term contracts doing the same or similar work. The presumption will not prevent an employer from engaging a worker on a series of fixed-term contracts, but it will act as an anti-avoidance measure to ensure that an employer cannot get around its duty to offer guaranteed hours by engaging the worker on a series of limited-term contracts even though they are actually doing the same work.
Greg Smith
Amendment 12 states that it is to be presumed by tribunals
“that it was not reasonable for the worker’s contract to have been entered into as a limited-term contract”
if the work done
“was of the same or a similar nature”
as the work undertaken by other employees, with the following conditions:
“(i) where the period in question is the relevant reference period, during that period;
(ii) where the period in question is the offer period, during that period or the relevant reference period;
(iii) where the period in question is the response period, during that period, the relevant reference period or the offer period.”
I have stressed the wording of the amendment because I would be grateful if the Minister could clarify what protection the clause is designed to give employees. The vast majority of businesses reading that could easily be forgiven for getting slightly confused. Why is that wording necessary, particularly on this measure, to create the protections that I think I understand the Government want to achieve? The amendment might result in confusion from most businesses.
Alex McIntyre (Gloucester) (Lab)
It is a pleasure to serve under your chairmanship, Mr Stringer. I am grateful to the Minister for introducing this amendment. It makes a lot of sense to make sure that we avoid the opportunity for unscrupulous employers to try to get around the legislation by entering into a series of short-term/fixed-term contracts so that they do not have to make anybody an offer.
We spoke at length this morning about making sure that responsible employers are encouraged, but ensuring that the loopholes are closed is equally important. Although Government Members are seeking to comment on the number of amendments, this is an example where the amendments are excellent and very well thought through. It makes an awful lot of sense to take into account the responses from experts and the consultation responses that the Department is receiving to make sure that the legislation works not only for businesses, but for employers. The amendment is very sensible, and I encourage everyone to vote in favour of it.
Justin Madders
This group of amendments is not quite as daunting as it sounds, because they all deal with the same point, which is the extension of time limits for making claims.
New schedule 2 amends time limits for making claims in employment tribunals from three months to six months. In recent years, as we know, demand has increased sharply. Increasing the time limit from three to six months will help to reduce pressure on the employment tribunal system, allowing parties to try to resolve their differences before resorting to formal litigation. The amendments apply to time limits for the majority of employment tribunal claims, including claims under the Employment Rights Act 1996, the Trade Union and Labour Relations (Consolidation) Act 1992 and the Equality Act 2010. If Members are interested, the full list of claims is set out in the new schedule.
Government amendments 16 to 18, 22, 28, 29, 33 to 36 and 83 ensure that the change is reflected for cases relating to rights that will be introduced by the Bill. Amendments 16 to 18 and 22 will increase the time limit for taking a claim to an employment tribunal that relates to the right to guaranteed hours from three months to six months. Amendments 28 and 29 will increase the time limit for taking a claim that relates to the right to reasonable notice of shifts from three months to six months. Amendments 33 to 36 will increase the time limit for taking a claim that relates to the right to payment for a cancelled, moved or curtailed shift from three months to six months. Amendment 83 will increase the time limit for taking a claim that relates to whether a worker, or a former worker, believes they have been subject to a detriment by an employer on grounds of industrial action.
Finally, Government amendment 21 is a small technical amendment, which will correct an incorrect section reference. The words “this section” currently refer to section 27BG, which relates to time limits for bringing a complaint, but they should—as I am sure everyone noticed—refer to section 27BF, the correct section under which a complaint may be brought to an employment tribunal.
On a more general note, Members may be aware that a number of years ago, the Law Commission recommended that the time limit for bringing employment tribunal claims should be increased from three months to six months. This set of amendments simply seeks to implement that recommendation.
Greg Smith
Quite a list of amendments and edits to the 100-day-old Bill.
I will start where the Minister left off. The amendments extend the time for employees to bring a case to the employment tribunal from three to six months if they believe their employer has breached the duties imposed by the Bill. That includes the provisions around zero-hours contracts and the right to reasonable notice. In that light, a reasonable question would be: why were the provisions not included in the Bill on introduction? What changed? Was that an oversight, or something never originally intended to be included in the Bill? What is the rationale? Furthermore, what is the rationale for increasing the period from three to six months? That is not a modest change—not a matter of a couple of days, a fortnight or something that most people might deem reasonable; that is a substantial shift. It is only right and proper that the Minister, when he responds, gives a full explanation for such a huge change from the original provisions in the Bill.
Data from His Majesty’s Courts and Tribunals Service shows the backlog in employment tribunals, with outstanding cases increasing 18% on last year. To add in additional burdens will add to the overall burden on the service, so as part of the consideration of the Bill and of the amendments it is crucial to understand what the Government will do not just to clear that backlog, but to create the capacity in the service to deal with the increase in demand that the Bill will undoubtedly bring about. I shall be grateful if the Minister will comment on his discussions with the Ministry of Justice to deliver on that.
Businesses, especially small and medium-sized enterprises, rely on the tribunals service being able to process claims quickly so, if the Government are to bring about such a huge and significant change to demand on the service, they should put in place the relevant steps. Have the Government undertaken any assessment of the impact that such an extension will have on employment tribunals, or the likely number of claims? It would help to know what, under the amendments, the Government’s assumptions are—will the level of increase that the Opposition fear come about?
Is there a model—I fully accept that such models are rarely 100% accurate, but they give the country and the service planners an important ballpark figure to be working around, going into the future—and, off the back of that, what is the impact on businesses, particularly small and medium-sized enterprises? If there is no such modelling—if there is no ballpark figure that the Government are working to—why not?
My final question on this group of amendments is: why does the Minister believe that it is proportionate or sensible to double the window in which an employee can bring a claim? Surely the three-month window is sufficient. As I said, the Opposition would like to understand why that doubling is so necessary.
Alex McIntyre
Apologies, Mr Stringer, if I inadvertently used “you” in my previous intervention. That was a mistake; I apologise.
I am grateful to the Minister for tabling these amendments. This is an important set of suggestions to extend time limits for bringing lots of tribunal claims. In my previous professional experience, the change will benefit businesses up and down the country, because one of the biggest issues for anyone involved in advising employers on employment law is the rush to bring employment tribunal proceedings, owing to the three-month time limit. It often stops negotiations from progressing fully, preventing an out-of-court agreement being reached at an early stage. In a commercial setting, most businesses are given six years to bring claims under contract against other businesses. It is only really in employment law that we have such a narrow window for people to bring their claims.
I am interested in the shadow Minister’s comments on employment tribunals—they are broken, but the responsibility for breaking the employment tribunals sits firmly on Opposition Members. We had years of under-investment in our courts and tribunals, and we have really long backlogs. The issue there for employers is that, given the actions of the previous Government, they are spending far too much money on people like me, as such proceedings take a significant amount of time.
Greg Smith
I understand why, in our combative political system, the hon. Gentleman wants to bring up the previous Government’s record. I gently suggest that the covid pandemic had a big impact on all court backlogs, be it tribunals or otherwise, and I ask him to reflect on the fact that the Bill will add to the pressure on the tribunal service. How much does he think it will add? Given that the Labour party is in government and in charge, rather than just pointing the finger at the previous Government, can he tell us what will materially happen to increase capacity in the tribunal service?
Alex McIntyre
The Committee received a submission from Lewis Silkin, a leading legal expert in the field of employment law. It says that some of the Government’s proposals will lead to a reduction in claims, and certainly in complex claims such as those that many employees with less than two years’ service may make under the Equality Act 2010 because they do not qualify for unfair dismissal rights.
The tribunal deals with unfair dismissal claims very quickly. Such claims tend to receive one, two or three days of consideration by a tribunal, at the most, whereas Equality Act claims are often listed for longer than a week. Giving people unfair dismissal rights from day one will reduce the number of people who have to bring Equality Act or whistleblowing claims to try to fit their circumstances, and that will mean a reduction in the number of tribunal sitting days.
I will not step on the Minister’s toes when it comes to the Department’s modelling for tribunals, but it is important to remember that as a result of the measure, more people will be able to negotiate and negotiations will be more sensible. Let us think about the anatomy of an employment tribunal claim. Day one starts when something happens to an individual. In the case of being sacked or being discriminated against, that thing is quite traumatic, so in the first week or so, employees are not generally thinking about their legal options. That is one week gone already. Then people have to look at getting legal advice, contact their trade union and look at the options available, all of which take time. By the time they are in a position to think, “Perhaps I will negotiate with the employer,” they are already two months down the line.
If an employee rushes through an employment tribunal claim, the practical implications are that the claim is really complex, the employee does not quite understand their legal claims and an awful lot of tribunal time and business time is spent on trying to clarify things. If we give employees longer, we will find that more claims are sensibly put. Employees will have obtained legal advice or sought support from their trade unions, and they will have had time to negotiate with employers about potential out-of-court settlements.
This is important and, most significantly, it is about access to justice: many people who are timed out of bringing a claim did not even realise that they had one in the first place. Not everyone has immediate access to the knowledge that they have rights at work and that employment tribunals exist, so it is important that we try to level the playing field to ensure that employees have time to bring claims in the best possible way. Not everyone is a lawyer. Individual employees, like many small businesses, do not have the benefit of being able to call up their local employment lawyer to get advice on potential claims. Preparing a claim takes time, and the measure means that employees will be able to make more sensible claims.
It is a very positive change, and I am glad that it is being made. The Law Commission recommended several years ago that the time limit should be extended from three to six months, so this is not an arbitrary time that has been plucked out of nowhere; it is based on Law Commission suggestions, as I understand it. I encourage all hon. Members to vote in favour of the measure.
Justin Madders
He is shaking his head—that is good. I certainly do not envisage that to be the case, but we recognise there is a backlog in the employment tribunals. Like many public services, they are under pressure, and there is a plan to recruit more judges in the new year.
Justin Madders
A lot of the questions the hon. Member asked will be dealt with by the regulations and by the anti-detriment provisions of the Bill. If he would like to see specific provisions in the Bill, he should have tabled amendments, but I believe we will address a lot of the detail he raised in due course. We are clear that this has to be a freely agreed contract between both parties. The employer should make the offer and the employee should be able to agree, of their own free will, on whether they wish to accept it. We will look closely at the coercion issue, because that has been raised with us.
Government amendment 13 introduces new section 27BEA of the 1996 Act. It will introduce a duty on employers to take reasonable steps to make a potentially qualifying worker aware of their right to guaranteed hours should they meet the required conditions—that is, to draw workers’ attention to the new right and to the fact that they may be eligible for it.
New section 27BF provides for workers to bring an employment tribunal claim to enforce their right to guaranteed hours. A worker may make a complaint if no guaranteed hours offer is made to a qualifying worker; if an offer is made but does not comply with the requirements relating to a guaranteed hours offer, such as offering work for a number of hours that reflects the hours worked during the reference period, or the offer does not comply with the regulations relating to such requirements; if the offer includes a prohibited variation to a worker’s terms and conditions; and if the offer does not comply with the requirements on the use of limited-term contracts, the prohibition on varying other terms, or the applicable requirements where the employer offers less favourable terms.
To ensure that all rights are supported by appropriate protections, the Government amendments have added further grounds. Thus, a worker may make a complaint to an employment tribunal if the employer fails to provide a notice stating that they are exempt from the duty to make a guaranteed hours offer and which exemption applies, or fails to provide a notice stating that a guaranteed hours offer is treated as having been withdrawn further to an exemption applying or to a relevant termination; if the employer gives a notice to the worker stating that they are exempt from the duty to offer guaranteed hours when they should not have done so; if the employer gives the worker a notice relating to an exemption that does not refer to any exemption as set out in the regulations, or that relates to the wrong exemption; and if the employer fails to comply with the duties to provide workers with information about the right to guaranteed hours.
New section 27BG outlines the time limit during which a worker may take their complaint to tribunal. Government amendments have been tabled to allow workers to take cases within six months, as opposed to three months, which is to align the Bill’s provisions with the changes we have talked about already. We have also tabled amendments that are consequential on the new rights included in the Bill, and also on the new grounds to make a complaint to the employment tribunal. Those relate to the additional requirements to serve a notice under new section 27BD, and to the claims related to the information rights.
Finally, new section 27BH provides for the remedies to a well-founded complaint. It provides that tribunals must make a declaration if there has been a breach and may award compensation to be paid from the employer to the worker. In common with other existing employment rights, the compensation must not exceed a permitted maximum, which will be set out in regulations as a multiple of a number of weeks’ pay. I commend clause 1 to the Committee.
Greg Smith
I am grateful to the Minister for that comprehensive outline of clause 1 but, as I reflect on our debate over today’s two sittings on the amendments to clause 1—the Government amendments that now form part of clause 1 and the Opposition’s substantive amendments, which were not accepted, and our probing amendments, which did not produce the answers we were looking for—I remain concerned that, putting aside some of the noble intentions beneath the Bill, there is still the lack of clarity we have spoken about regarding so many areas of clause 1.
The Minister himself admitted earlier that some things are still to be consulted on and that others are yet to be brought forward through secondary legislation. I am afraid that just does not cut it for businesses up and down the country that are still struggling with the aftermath of covid, the invasion of Ukraine and so many other factors. They need certainty. They need to know, if the rules of the game are changing, exactly what they are changing to—not some ballpark or some in-principle movement towards, but precisely the rules that they are being asked to play by.
Businesses will, of course, comply with any legislation passed by this House and this Parliament, but this provision is an unreasonable ask of them, whether in respect of what would constitute a low-hours contract, fixed-term contracts for qualifying workers or agency workers, or the exact definition of the reference period. It is simply an unacceptable proposition to those who run businesses, particularly, as multiple parties have said today, small businesses, be they microbusinesses or medium-sized enterprises—I fully accept that we can debate the exact number of employees that constitutes a small or medium-sized enterprise.
I recognise many of the good points the Minister made in his speech, and there are many things that we in the Opposition can get behind—at least in principle, if not in the precise lettering of the detail—but the lack of clarity, the Henry VIII powers in some parts and the “still to consult” parts in others make it very difficult for the Opposition to support clause 1 as it currently stands.
As I said earlier, we want to be a constructive Opposition. We might not agree with the Government’s standpoint on many things, but it is important for the United Kingdom that they succeed in their endeavours and that they do not provide an environment in which there will be fewer jobs, not more, with businesses being more reticent to take on new members of staff. That goes particularly to the points around how people who are deserving of a second chance in life, no matter what has happened to them before, may not get that opportunity because it is too big a risk for small businesses that are struggling to get around all the new regulations, rules and laws.
I particularly highlight again the point about small businesses just not having the capacity to deal with new regulation. As has been said, they do not have HR departments or in-house legal services, and they cannot necessarily afford to hire them in if they are to continue producing their products or selling their services to the great British public, or wider than that. I urge the Minister to go back to the Department, focus on where the detail is lacking and put an offer to the House and the wider country. Our business community need not necessarily agree with it, but they should be comfortable that they can understand it and put in place the measures for their employees and businesses. To ensure their growth and success, they desperately require certainty.
Laurence Turner
I will not keep the Committee long. A lot has rightly been said about the need for certainty for business, but we should remember that the other side of the coin is the need for workers to have certainty. I was contacted recently by a constituent who works a zero-hours contract in the hospitality sector. He is unable to get a mortgage because the bank will not grant that facility to him due to the nature of his contract. At the level of the individual, this means economic activity and family planning being put on hold.
In parts of the economy, there are employment situations—we do not, of course, tar all employers with the same brush, but if there were no bad employers there would be no need for trade unions—in which people are turning up to work, sometimes in digital form, to find shifts being mediated through applications, not even through people. It is the 21st-century equivalent of a foreman standing at the factory gate and allocating shifts on an arbitrary basis. We have heard today about the potential, which is too often realised, for favouritism and abuse of that facility.
We have had good debate about a number of details regarding the changes in the Bill. The changes in clause 1 will be welcomed by people who work in the retail sector, including in my constituency, and in other sectors that have high rates of zero-hours contract working, including the care sector. I very much welcome the clause.
Greg Smith
I beg to move amendment 145, in clause 2, page 13, line 25, leave out
“a specified amount of time”
and insert “48 hours”.
This amendment defines reasonable notice of a requestor requirement to work a shift as 48 hours.
The Chair
With this it will be convenient to discuss the following:
Amendment 146, in clause 2, page 14, line 17, leave out
“a specified amount of time”
and insert “48 hours”.
This amendment defines reasonable notice for the cancellation of a shift as 48 hours.
Amendment 147, in clause 2, page 14, line 22, leave out
“a specified amount of time”
and insert “48 hours”.
This amendment defines reasonable notice for the cancellation of a shift as 48 hours.
Amendment 148, in clause 2, page 14, line 28, leave out
“a specified amount of time”
and insert “48 hours”.
This amendment defines reasonable notice for the cancellation of a shift as 48 hours.
Greg Smith
The amendments are intended to probe the Government’s thinking, as once again it is not clear to us in the Opposition whether they have done the necessary policy work to justify the approach taken in the Bill. The impact assessment clearly shows the administrative cost that the Bill will have in shift and workforce planning, with estimated costs of some staggering £320 million to business. I would like to ask the Minister what evidence there is for the late cancellation or alteration of shifts being a problem of such magnitude that it requires legislation. The Bill does not set out what would be a reasonable notice period for cancelling a shift, and the Government must be clear what they actually intend to do in that respect.
This is a serious point. The burdens that this provision would place on small business would undoubtedly be considerable. Some small businesses cannot always, in every circumstance, guarantee shifts; that is perfectly reasonable. For example, a small furniture-making business with two employees has issues with the supply chain. It cannot provide work until the materials have actually arrived, but the employer in those circumstances could have no idea how long it will take for those materials to materialise—perhaps they are specialist materials or something that has to come from abroad and is delayed in shipping channels. Attacks by Houthis on shipping have caused supply chain problems, for example. In those circumstances, those businesses find themselves in a very sticky place and it would be unreasonable to try to argue that they should absolutely guarantee those shifts to their workers.
Alex McIntyre
I understand the hon. Gentleman’s point about uncertainty in certain industries meaning that businesses may not be able to guarantee shifts.
I want to ask two questions. First, cannot certain industries take out insurance policies to account for some of those unforeseen circumstances, particularly when it comes to shipping? Secondly, what about the uncertainty for employees for whom losing a day’s work would mean a deduction of 20% on a five-day working week? If someone told the hon. Gentleman that his salary would be reduced by 20% next week, would he not find that difficult?
Greg Smith
I am grateful for the intervention. On the hon. Gentleman’s first point, yes, of course there are insurance policies that many businesses will take out. But the example I just gave is one I can see affecting many businesses in my own constituency; there is a strong furniture making heritage around Prince’s Risborough in Buckinghamshire. There are very small businesses that do an incredible job and make some fantastic furniture, but they are microbusinesses with only a couple of employees and they operate on tight margins. They would not necessarily be able to bake the additional cost of a very expensive insurance policy into their bottom line without significant pressure on their overall business.
I accept that I am not talking about every or possibly the majority of businesses; my point in the amendments is that some circumstances might need a more sympathetic ear. In such cases, it could be argued reasonably and sympathetically that businesses in such a sticky spot would be unable to meet the requirements that the Bill sets out. Supply chain problems are just one example.
I take on board the second point made by the hon. Member for Gloucester, although, as I said in one of the earlier debates, I was self-employed for 15 years before entering this place in 2019. Some clients varied every month their requirements of the services that I provided back then. It was frustrating: nobody wants to be in that position, but it is sometimes a business reality, particularly if the ultimate client is struggling for whatever reason—their supply chain or the fact that they are just not doing very well so they need to throttle service provision up and down. I know that my example is not the same as that of a direct employee, but sometimes business needs a sympathetic ear.
To come back to my earlier point, nobody wants people not to be in a secure employment environment. Sometimes, however, things happen in businesses. Businesses in the automotive sector have shed quite a lot of jobs in recent weeks—look at Stellantis and Ford. Sometimes these things happen. With greater flexibility, perhaps more jobs overall can be saved in the short, medium and long terms, rather than having in every circumstance rigid rules that do not allow businesses that flexibility. I suggest that most people would want jobs to be saved rather than lost through that level of rigidity.
I will continue with my questions to the Minister about these probing amendments. In the furniture company example that I gave, what notice would an employer have to give? What do the Government expect an employer in such circumstances to do? From the hefty number of amendments that the Government have tabled, it looks as though small businesses are going to have to pay those employees for hours not actually worked; and even this will be through no fault whatever of the actual business in question.
Given that the Regulatory Policy Committee has flagged the risk that employers, often in fluctuating demand sectors such as hospitality and retail, may respond by scheduling fewer shifts to avoid penalties for cancellations and the consequential lost output to the economy, I would be grateful for the Minister’s appraisal of whether the provisions on short notice cancellations will support or inhibit the Government’s aim of actually achieving economic growth.
Justin Madders
I am grateful for the shadow Minister’s amendment. If it is a probing amendment, he has asked a lot of reasonable questions. There are, of course, things that we will be hoping to address today and during the passage of the Bill—and, indeed, the subsequent regulations.
The first thing to say is that we do not believe that it is right at this stage to put the time into the Bill; we want to give ourselves flexibility to respond to how the issue works in practice and to changing circumstances by doing that in secondary legislation. However, the hon. Gentleman has asked a perfectly reasonable question: who are we trying to help? What is our purpose?
Our purpose is to try to help those people who simply do not have that security in their lives at the moment. Research from the Living Wage Foundation suggests that 25% of insecure workers have had their shifts cancelled unexpectedly, with 88% receiving less than full shift compensation. Many workers receive their shift schedules without reasonable notice, and that prevents them from being able to effectively plan their work, social lives and other responsibilities.
Living Wage Foundation data found that in quarter 2 of 2023, 78% of workers received less than two weeks’ advance notice of shifts, with 5% of workers receiving less than one week. That can disadvantage workers’ ability to effectively plan their future income, particularly when that relates to budgeting for regular outgoings when shifts are cancelled, moved or curtailed at short notice. The impact on workers can include an increased reliance on debt and an inability to forecast income or find substitute work, childcare expenses and, on some occasions, travel expenses. Such implications represent the sort of one-sided flexibility that we are trying to deal with.
Evidence suggests that the income insecurity premium could be worth as much as £160 million per year, but the issue is really going to be about that benefit targeting businesses in the right way. We believe that good management practice can deal with an awful lot of this without the need to resort to legislation.
Justin Madders
As the hon. Member will know, the total cost to businesses from the Bill, as set out in the impact assessment, is about 0.4% of total employer costs. We absolutely acknowledge that there are many good employers out there who do this already, and we hope that there are many employers who do not who will feel that it is a positive once the legislation comes in. We want to take them on that journey and inform them why this is a positive thing and a benefit for their workforce. Importantly, they will see that the playing field is levelled and hopefully be able to compete more ably with others who might in the past have undercut them. But part of that will be making sure that they have access to good advice, good support and a guiding hand to make sure that the clear policy outcomes we want to see from the Bill are actually delivered. On that note, Mr Stringer, I ask the shadow Minister to withdraw his amendment.
Greg Smith
I remain very concerned about some of the real-world applications. I accept that it will have a negative impact in a minority of cases. The purpose of our amendment, as I said, was to probe the Government, so I am happy to confirm that we will withdraw it.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Justin Madders
I beg to move amendment 24, in clause 2, page 13, line 42, leave out
“from what time on which day”
and insert
“when the shift is to start and end”.
This amendment requires notice of a shift to include when the shift is to end (as well as how many hours are to be worked and from when).
Justin Madders
I am afraid we are back into some of the more technical minor amendments, on which I will not detain the Committee too long.
Amendment 24 will ensure that employers have to give reasonable notice of not only when a shift starts and how many hours it will be worked, but also when it will end. The Government’s intention is to avoid a scenario whereby a worker is notified of the start time and total duration of a shift, but does not receive reasonable notice of whether those hours will be in a single block, or whether there may be a large break.
The current drafting would allow an employer to specify that a worker is required to work, for example, for three hours from 9 am on Friday, without specifying whether the shift will be from 9 to 12, or from 9 to 10 and then again from 12 to 2. In either scenario, the notice would meet the requirements to be a notice of the shift. The amendment closes this potential loophole. Some of my own children have gone into work and then been told to go and have a two-hour lunch break—unpaid. We clearly want to avoid that through this amendment.
I turn briefly to Government amendments 25 to 27, which will ensure that workers are entitled to reasonable notice where an employer cuts working hours from the middle of a shift as well as from the start or end. The current drafting would arguably allow employers to reduce the number of working hours in the middle of a shift without giving reasonable notice. The amendments close that loophole, ensuring that workers have to be given reasonable notice if an employer decides to change the hours of a shift by reducing the hours in the middle.
Greg Smith
I will be brief in my response to these Government amendments, which make the requirement for the right to reasonable notice of cancellation or changing of shifts more onerous. I spoke to these principles during our debate on the previous set of amendments in my name, but I ask the Minister gently now, why were these provisions not included in the Bill on introduction? Was it an oversight? Will there be a repeat of the line, “It was the intention but we just didn’t do it”, or is it something else? I would be grateful for clarification.
As I argued during the debate on the previous set of amendments—this point is relevant to this set too—why are these amendments so necessary? Does the Minister really think it a proportionate burden to place on businesses, particularly in those cases where there will be fair and reasonable grounds for a business not needing to provide notice of a change in shift to an employee? What assessment have the Government made of the cost to businesses, given that they will now essentially have to pay for work not done, without recourse to force majeure provisions or whatever it might be—where it is genuinely not their fault that they cannot provide the work to their workers for whatever reasons? Force majeure is a well-established principle in all sorts of sectors across the world.
I urge the Minister to consider carefully how he can ensure that out-of-control eventualities are looked after in the Bill; otherwise I fear it will create a scenario where particularly the smallest businesses—those one, two or three-employee businesses—are placed in a very difficult financial position. I cannot believe that the Government believe that is the just and right thing to do, and that they could not come up with some other safeguards to protect those microbusinesses—those small enterprises—that might find themselves in a sticky spot.
Anneliese Midgley (Knowsley) (Lab)
I refer Members to my declaration of interests. I am also a member of Unite and the GMB. It was said in an evidence session last week that in hospitality—a sector that we are very focused on improving in the Bill—
“employers bring in too many workers for shifts and say: ‘Sorry, we do not need you any more. Go home.’ They then cancel a shift without any compensation for the workers for their travel time”. ––[Official Report, Employment Rights Public Bill Committee, 26 November 2024; c. 76-77, Q71.]
As many of my hon. Friends have said, while we are considering the burden on business, we must also consider the burden on workers. We are trying to level the playing field and make a more equal way, where workers are considered.
Greg Smith
I do understand the hon. Lady’s point. Nobody wants to see people turned away as they turn up for work, with their employer saying, “Sorry, no work today.” That is not a position that we want anybody else to find themselves in, but I am trying to make another point.
Let us take the hospitality sector as an example, which has had a pretty rough time since covid. It is one of the sectors—be it pubs, restaurants or attractions—that is struggling the most to recover from the pandemic. There are certainly times when I turn up to a pub in my constituency, perhaps on a Tuesday night, and it is completely empty and has no bookings. That is not necessarily the pub’s fault, but it will be a problem if there is an absolute requirement for the pub still to pay its full staff rota because it was full the previous Tuesday night and needed all those staff. I think this is one of those real-world examples where there has to be a little bit of flexibility; businesses have to be able to say, “Sorry, we’ve got no bookings tonight.” Worse than that, there might be the nightmare scenario that the beer delivery has not arrived and there is not actually any beer to sell.
Michael Wheeler
Does the shadow Minister accept that it is not the fault of the worker either? In fact, the employer has more control over the situation, on balance. On his example of planning out work, especially bookings, employers would know that there were no bookings further in advance than on the day—there are comparable examples across other industries—so giving notice of that on the day is completely and utterly unacceptable. The cost, in terms of proportion of income, is disproportionately borne by the worker, not the business, and these measures we are discussing are a proportionate way to rectify the situation.
Greg Smith
Fundamentally, I agree that it is not the worker’s fault either—I am absolutely at one with that. I made it very clear that I do not want to see anyone turn up for work only to be turned away and told, “Sorry, no work today.” That is not a great place for anyone to be. I absolutely understand and accept the hardship that that will place on someone who will perhaps not get that day’s wages, but I think there should be greater flexibility in circumstances where it is not the business’s fault either; those situations may be few and far between, but they will happen in hospitality, and they may happen in some manufacturing sectors where supply chain problems have occurred, as we discussed earlier.
If we force businesses into a place where they have to shell out significant amounts of money for no gain—as we discussed earlier, the workers are the ones who produce the services, goods, products or whatever it might be that enables the business to have the money in order to pay people in the first place—and we push them into a place where their low margin is eroded even further by paying for things that are completely outside their control, then those businesses may well go bust.
We are talking about the hospitality sector—and we are seeing pubs close virtually every week. That is a very sad state of affairs, particularly in rural communities, where the pub is often the beating heart of a village, or certainly the social hub. It is not just a place for a pint; pubs do a lot of social good as well. We are seeing pubs close far too frequently for all sorts of reasons, often because of the low margins and other factors that have come in—I will resist the temptation to go too hard on the Budget. There is a cumulative impact, and this measure could well be the straw that brings the whole house down. I want the Minister and Government Members to reflect on where we could bake in other forms of safeguard and flexibility, so that the Government do not put a number of businesses on to that sticky wicket.
Anneliese Midgley
Can I clarify whether the shadow Minister believes that workers should shoulder all the burden, and that businesses should bear no responsibility?
Greg Smith
No, I do not accept that. It is not helpful to see this as either/or. As I explained, there is a symbiotic relationship between businesses and their workers—their employees. Neither succeeds without the other. It is therefore not the case that I, in any way, shape or form, want to put all the burden on one or the other; what I am arguing for, and what I hope Members in all parts of the Committee can reflect on and appreciate, is some of those real-life, lived-experience and real-world examples, where things just do not go very well and people find themselves—
Greg Smith
I am very happy to do so once I finish this train of thought—we are getting far more debate in Committee than we do in the main Chamber.
We have to find the balance, where we do not just point the finger at the business owner or the worker, but see them as a symbiotic being—because neither side can survive or thrive without the other.
Jon Pearce
I am grateful to the shadow Minister for giving way so often. I want to address a principle: the Working Time Regulations 1998 established that if an employee, or indeed an employer, wishes to take holiday, the statutory notice period will be twice as much as the holiday taken. That is the same principle in the Bill, in that it is perfectly reasonable for a worker who does not have guaranteed hours to be given notice when work is not available. That statutory principle has been in place since the last century, so this is not outwith what every worker should expect. It is perfectly reasonable that if a worker has been told that work is available, they should be given reasonable notice if it is not. The shadow Minister’s Government kept to that principle, and it is perfectly applicable to employees and workers in this situation as well.
Greg Smith
The hon. Gentleman is right about the principle of notice for holiday—that is quite clearcut. Holiday is pretty much always planned, although there are circumstances in which someone might need to take leave at very short notice—perhaps they have one of those dreaded phone calls that a relative is seriously ill, so they have to leave to be with them, or there might be some other pressing emergency. I think most employers will be flexible and compassionate about such emergency circumstances, ensuring that an employee can be with a relative who has been in an accident or is critically ill, for example.
Generally speaking, though, holiday is planned—just as, generally speaking, the availability of work is planned—but as with emergency situations when someone might need rapid time off, other emergency or out-of-control situations might affect a business. It would then put an intolerable pressure on that business suddenly to have to pay someone an amount of money that might be more than they would even have earned in that day—selling beer or cake in the hospitality sector, or producing a cabinet in furniture making, or whatever it might be.
I hope that the hon. Gentleman appreciates where I am coming from. We are not talking about the vast majority of cases or the bulk of the economy here; we are talking about the unexpected emergency scenarios that are out of anyone’s real ability to predict, which happen in the real world. I am therefore very concerned that the rigid provisions being proposed by the Government will put a number of businesses in a difficult place.
Several hon. Members rose—
Alex McIntyre
I want to drill down on an important point of principle that we should be considering. I do not want this to become a tale of woe from my previous career in hospitality, but I remember being docked three hours’ pay by my boss because there were no customers for those three hours, and there is a similar point of principle here. I understand that there will be times when a restaurant is empty, but someone turning up to work will expect to get paid for that shift. Then there is the cost to the employee of going to work. People might have to secure childcare—I have recently had to look at the cost of childcare and the astronomical prices that are being charged—or pay to travel into work, and they might have paid in advance and be unable to get a refund. Why does the shadow Minister believe that the burden on the employee is less important than the burden on the business?
Greg Smith
I can assure the hon. Gentleman that, with three children, I am acutely aware of the cost of childcare. The point I am making, to go back to the one I made earlier to his hon. Friends, is that this is not “all or nothing”. It is about recognising, to refer back to the answer I gave the hon. Member for High Peak, that at certain times, albeit not the majority of cases—in fact, far from the majority of cases—circumstances will arise that are beyond the business’s and the employee’s control, and they will push that business to the very edge. It is not a happy place or a good place to be, but there are some realities here that I think need much more careful reflection.
Chris Law
I have been both an employer and an employee in a number of situations, including in retail and hospitality, which we have been hearing about. The hon. Member talks about emergencies, and I understand that emergencies can happen—I have been an employer when we had an emergency situation. What usually happens in those circumstances is that people find other things to do. There is always stuff to do in a business—stuff that might otherwise get put to one side—so there will be an opportunity for employees to work with employers in emergency circumstances.
What I do not understand is this. At what point, in the hon. Member’s mind, do employers notify employees? When do they say, “Look, there’s a situation—it’s an emergency. There is no chance at this time that I can help you come in. Would you consider not taking hours in this instance?” The hon. Member has talked about lived experience; I have spent many years in hospitality—I trained as a chef, and I know exactly what it is like working in restaurants and hotels. Lots of things happen, including empty restaurants, but there is also an onus on the employer to make sure that the restaurant has enough people in of an evening. If they are not there, it is not the employee’s fault; it is the responsibility of the business. If the business is on its knees, then frankly that is in no way the fault of employee—unless, of course, they are not turning up for work or something. In truth, is it not the case that a business in that position is just not viable?
Greg Smith
I am grateful to the hon. Gentleman for his intervention. He is right that there may well be something else that can be done—perhaps a stocktake, or making a start on refurbishing the place, or whatever it might be—but that will not be the case in every circumstance. I can only repeat the point that I am not making this argument in respect of the majority of cases, or those that might affect a business that is already in distress; I am making it in respect of those few occasions that might take a business to that point or much closer to it. I cannot imagine that anybody on this Committee, or indeed any Member of this House, would want to see that unintended consequence.
Laurence Turner
I am grateful to the shadow Minister; I suspect he is setting some kind of record with the number of interventions he is taking. Earlier, he said that there may be alternative measures and protections to mitigate the problem that the Minister is seeking to address, whereby someone has been called to a shift but has arrived, incurring some cost, to be told that there is no work available. What alternative measures does the hon. Member have in mind?
Greg Smith
There are a number of options that could be looked at. The time set out in the regulations could be much more flexible. There could be safeguards for force majeure circumstances, which is common in a lot of contracts. There is no reason why that could not be in legislation. Or if the Government want to go down this path, albeit it is not something that Conservatives would propose, perhaps a more elegant way of going about it would be some sort of legislation on compulsory insurance against such eventualities that ensured that both sides were able to benefit—that the employee still got paid at least something, if not their full expected wage for the day, but the business was not directly out of pocket either. That would have to be tested in the insurance industry to see where premiums would come out, because they may well be unviable, but I gently suggest to the Government that it is a tyre worth kicking.
I conclude with a point I have made many times: this has to be about flexibility in real-world circumstances.
Sarah Gibson
The Minister made an extremely good point about the security that is required. It should not be an arbitrary 48 hours that is given. Specifying the time for each sector, presumably under guidance, would perhaps be the most appropriate thing.
I have talked many times to people in my constituency who work in the care sector and are employed to visit people in their own homes. They are given a start time for a shift and are quite often told that they will work a certain number of hours, but it is not clear until they turn up to the shift how much of a gap there will be between the times at which they are getting paid. That can leave them with shifts that last a considerable time but contain a gap of several hours, during which they might be miles from home and it might not be worthwhile going home for lunch, so they incur costs on their own time.
I welcome the attention to the lack of clarity about shift working specifically for home visits in the care industry. This is something that we need to look at. Perhaps there needs to be guidance on the time for each sector, because each sector has its own issues. That is certainly true when one looks at hospitality.
Justin Madders
I will not detain the Committee too long, because it feels like we have had the clause stand part debate already. I will briefly go through the provisions of clause 2, which creates the right to reasonable notice of shifts. As I set out when we discussed clause 1, we must tackle one-sided flexibility. Guaranteed hours is an important part of that, but we must also ensure that workers have reasonable notice of their shifts, so that they are enable to effectively plan their work and personal lives.
If someone’s shift is moved but their pay is less than the cost of the babysitter, that is obviously a negative. If someone is offered a last-minute shift but it is 60 minutes away by bus and they have no car, they should not be penalised or have a black mark put against them if they are not able to take it up. We can do better than this. We want to establish a more balanced partnership between workers and employers, and we hope to do that with clause 2. It will still allow employers to make changes to shifts, but it will also provide incentives for employers to meet the standard of the best employers, encouraging better planning and engagement with their workers. These provisions to introduce a right to reasonable notice of shifts and to changes in them are a small but important step towards making the lives of many shift workers and their families feel a little more secure.
Clause 2 creates several new sections in the Employment Rights Act 1996. New section 27BI outlines the duty that will be placed on employers to give reasonable notice of shifts. That duty will apply to workers on zero-hours contracts and arrangements, as well as workers on other contracts that will be specified in regulations but are likely to be low-hours contracts. New section 27BJ specifies that employers must also give reasonable notice of any moves or changes of shifts. New section 27BK notes that, as for other sections, agency workers are not covered by this measure—new section 27BV provides a delegated power to make corresponding or similar provision in relation to agency workers. In addition, section 27BK specifies that workers are not entitled to reasonable notice of shifts that they themselves suggested they work. For example, they would not be entitled to reasonable notice of overtime that they themselves had suggested. That right does, however, apply where the employer agrees to a suggested shift and then later changes or cancels the shift. Finally, the section contains a power to make regulations about how the notice should be given and when it is treated as being given.
New section 27BL explains that, where an employer is required to make a payment to a worker because the employer has cancelled, moved or curtailed a shift at short notice, the worker cannot get compensation for lack of reasonable notice for the same cancellation, movement or curtailment. New section 27BM enables workers to complain to employment tribunals that their employer has failed to comply with the duties to give reasonable notice. New section 27BN provides that tribunals must make a declaration where they find for a complainant and may award compensation they consider appropriate to compensate the worker for financial loss suffered as a result of the failure to give reasonable notice. This compensation will be capped in regulations and, in line with common law on recoverable damages, compensation will also take account of the duty on the claimant to mitigate their losses.
Greg Smith
I will not detain the Committee for much longer because, as the Minister said, it felt as though we had the debate on the whole clause during the debates on the amendments. I reiterate my concern about some of the provisions in the clause. Although I accept that the Minister said that, further on in the Bill, there is provision for force majeure measures to be introduced, there is a gaping hole for those emergency, unexpected, out-of-control circumstances, and this clause fails to fill it. However, we will almost certainly return to that on Report, so we will not press the clause to a Division.
Question put and agreed to.
Clause 2, as amended, accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Anna McMorrin.)
Employment Rights Bill (Fourth sitting)
Greg Smith ExcerptsThursday 28th November 2024
(3 weeks, 4 days ago)
Public Bill CommitteesRead Full debate Employment Rights Bill 2024-26 View all Employment Rights Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 28 November 2024 - (28 Nov 2024)
The Chair
Welcome back. Will the witnesses introduce themselves, please?
Mike Clancy: I am Mike Clancy, general secretary of the Prospect trade union.
Andy Prendergast: I am Andy Prendergast, GMB union national secretary for the private sector.
Greg Smith (Mid Buckinghamshire) (Con)
Q
Mike Clancy: The primary purpose of the Bill is to reset employment relations, and trade unions are an important part of that. I have the privilege of sitting on the ACAS council, which is a tripartite body responsible for overseeing good employment relations and good practice. That demonstrates that unions, employers and independents can work together successfully. I see that as the primary purpose.
The reality is that in so many jurisdictions that have positive employment relations and that are addressing their productivity challenge, unions play a very important role. An objective to have the right level of trade union membership in the economy, so that working people have a voice, is at the heart of the Bill. Previous Administrations have restricted the ability of working people to have a voice. So there is a real opportunity to, first, improve employee relations; secondly, ensure that working people generally have a voice; and thirdly, ensure that unions are part of the fabric of the economy in a way that addresses the challenges ahead. I would say that the Bill can deliver all those objectives.
Greg Smith
Q
Mike Clancy: The key thing we would like to see is that access to workplaces is not confined to physical premises, but is also digital. That applies where union recognition already exists. We need to ensure that we can address the workplaces of today and tomorrow, not just those of the past. Physical access is important, but many workplaces have remote, hybrid, virtual working arrangements, so we would want the Bill to be amended to ensure that digital access, in a way that is compliant with data protection, is addressed.
Greg Smith
Q
Mike Clancy: It probably looks like ensuring that the best practice from employers now—who allow us access to their intranet and to electronic and digital means, in terms of their staff—becomes the norm, and that it complies with data protection. That happens in workplaces up and down the country now, but some employers see the law in a different way.
An important thing to get across is that if you start to talk to an employer about organising their workplace, the best way to do it is by consensus. That means understanding the employer—understanding the nature of their product and what their concerns may be—as well as making sure that their workforce’s aspirations, if they want a collective voice, are delivered in a way that works successfully for all parties. The access conservation needs to reflect the nature of the workplace as it is now, not just as it has been. It should not be confined to physical premises.
Andy Prendergast: From our point of view, this is very much a 21st century Bill for a 21st century economy. It is not about looking back; it is about trying to make sure that what we have is fit for purpose, moving forward. Unionisation rates are around 20% at the moment. If we look at a graph of unionisation and also at a graph of rising inequality and the fall in productivity, we will see that they are almost perfect correlations. We believe that collective bargaining is a way of improving things. That has been identified by organisations as diverse as the World Economic Forum and the Church of England. If the Bill ends up with higher levels of unionisation, which leaves lower levels of inequality, we believe that that will be a good thing.
On where the Bill is lacking, I think, like Mike, that we need to make sure that there is a digital aspect of access. Many of our members working for gig economy platforms in parts of the new economy do not have the old workplace that we traditionally know. It is not a factory and not necessarily an office. So we have to talk about how rights can be accessed by people who work remotely, who work from home, or who simply do not have a workplace.
There is one area where the Bill could be strengthened. We welcome the improvements in statutory sick pay, but we do not believe that they go far enough. We did a survey today of care workers at HC-One that shows that over one third cannot afford to take sick leave. We saw during the pandemic that having people go to work when ill, potentially spreading diseases, is bad for everyone. We think something could be done on that later that would ultimately help workers and help the economy generally.
Greg Smith
Q
Andy Prendergast: They key thing for us is that everyone who ultimately wants to join a trade union has the option to do so. It is important that people are aware of their rights, aware that they can join trade unions, and aware that they have a right to, for example, SSP on day one, statutory holidays and the minimum wage. Rights that people do not know about and that cannot be enforced are ultimately no use. This is shamelessly partisan, but I would like to see union rates being far higher, and I think that the economy as a whole would benefit from that.
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
Q
Andy Prendergast: I think the Bill is a major step in the right direction. One of the big problems that we have seen, certainly over the last 30 to 40 years, is the huge increase in insecurity in the workforce. That tends to have a massive impact on the individual concerned and their ability to fully partake in the economy, and to make long-term commitments through mortgages and loans—the kind of stuff that drives the economy. Ultimately, we have seen that as they have lost their guaranteed hours—in zero-hours jobs, for example—and there has been the removal of their employment rights, those people are less able to exercise those rights. So we see the Bill as a major way of moving industrial relations forward.
We would also point to the work around the pandemic. In the last 14 years, we were very much locked out of Government in most areas, yet when the pandemic came around, there was a fantastic bit of work between the CBI, the TUC and the Government, with Rishi Sunak standing on the steps of No. 10 talking about the fantastic work that led to the furlough scheme, which saved millions of jobs and millions of people from poverty. What surprised us is that that great work was then stopped virtually as quickly as it happened. If we look at other G7 countries, a tripartite system is what drives higher levels of productivity, lower levels of inequality, and ultimately, higher levels of investment and economic outcomes. We think that the Bill is a long overdue step in the right direction of moving some power back towards workers and away from businesses, too many of which exist for exploitation.
Mike Clancy: I echo those comments. If we look at the responses from the business community, yes, there is going to be some anxiety about the detail and how it will work—again, I reference my experience not just in ACAS, but from working with employers more generally—but we find ways to do this and operate in practice successfully. Good employers have nothing to fear in the Bill. That is not just good employers that are larger, and we think that with the right degree of consultation, which the Government have committed to, we will be able to address those areas where there are a few wrinkles and things to ensure work in practice.
We have to reflect on what the alternative was. The deregulatory, more de minimis approach to employment regulation applied previously, and if that trajectory had continued, we would not have addressed the issues of precarious work and productivity, and we would not have been able to do that in a way that looks at the workforce of the 21st century, as opposed to looking backwards.
There is a lot in the Bill, but that is not surprising. There will probably be a long period of adjustment. With the right consultation, I think we will get to a position where we look back at this as a milestone in changing how we do things, a paradigm shift in relations. I think that it will drive better engagement not just for unionised workforces, but for workforces more generally, because that is where employers will see that they can answer the challenges on the next generation of technology insertion and organisational design, and make sure that they can get the talent that they need.
The Chair
I do not know what the collective noun for professors is—a proliferation, perhaps. Anyway, could you please introduce yourselves briefly?
Professor Bogg: I am Professor Alan Bogg, and I am a professor at the University of Bristol and a barrister at Old Square Chambers.
Professor Deakin: I am Simon Deakin, and I am a law professor at the University of Cambridge.
Professor Simms: I am Melanie Simms, and I am professor of work and employment at the University of Glasgow.
Greg Smith
Q
Professor Deakin: I would not say that it has holes in it. It is perfectly normal to legislate in this way and defer complex matters to regulations. As a potential Act of Parliament, it is no more or less complex than similar Acts that we have had in the past. Labour law has always been complex and very granular. There are many provisions in the Act that will take effect without the need for further delegated legislation, and there are quite detailed schedules. I do not have a problem with the way it has been drafted, but there are issues with its scope and coverage, which we might go on to discuss.
Professor Bogg: It is a very ambitious piece of legislation, and it was delivered at lightning speed—in 100 days—which is an important part of the context. The collective labour law dimension of what is in the Bill is actually very simple. Much of it is in the form of repeal, and there are some proposals for tweaks to the existing structure. In terms of the collective dimension, I do not think the Bill has holes in it. It gives a tolerably clear indication of what the relevant provisions will look like and what needs to be done.
In terms of the individual provisions, it is fair to say that there is detail that needs to be worked out on day one dismissal protections and on guaranteed hours, but those are very complex issues and I do not think there is anything unusual about that. It is the beginning of a conversation, not the end of the conversation, and that is why we are here today.
Professor Simms: I am not actually a professor of law; I am a professor of work and employment, and general employment relations. I am always interested in the system as a whole, and how law and the implementation of all kinds of other pressures collectively shape employment relationships.
I agree with my two colleagues that the Bill is a very useful starting point. Law can only ever go so far in determining the rules of the employment relationship. It will always rest on wider social systems, economic systems and so on.
Greg Smith
Q
Professor Deakin: The RPC said that about some of the impact assessments—it raised a red flag over some of them. They are concerned not so much with the legal drafting as with the economic effects of the law. The impact assessments are engaging in a cost-benefit analysis, which is attempting to put some numbers on the impact the law might have on the economy in terms of cost to employers and knock-on employment effects. Actually, they have quite a strict protocol to deal with. What counts as a cost is set out in some detail in protocols that we could discuss. For example, the cost to private parties—to employers—counts as a cost even if that is simply redistributing to households and to workers. From an economic point of view, we would be interested not so much in the private cost, but in the impact on the economy as a whole. Do these laws interfere with the way markets work? Are they going to lead to unacceptable costs, or will they produce countervailing benefits?
As a scholar interested in the economics of law, and having researched the impact of labour law, I was surprised by some comments in the RPC documentation. I was very surprised to read the RPC suggest that there may not be inequality of bargaining power in certain sectors, such as the public sector or transport, where there are very large employers, some of which are effectively monopolies. There will probably always be some inequality of bargaining power between individual workers and even smaller employers, but we have trade unions and collective bargaining because there is that inequality of bargaining power. The part of the Bill that addresses the ability of unions to organise, and to organise industrial action, in sectors where there are very powerful employers does seem to me to address a fundamental issue of inequality of bargaining power.
Elsewhere, the RPC asks for more evidence about asymmetric information and productivity. I thought the impact assessments were actually very good, in citing secondary sources on those very issues, and also balanced. They cited—I should declare an interest—work I wrote, but they also cited other work. You will see scholars cited in the impact assessments who have a less positive view than I do about the economic effects of labour laws. There are no citations at all in the RPC documentation. Now, that may be because that is not the job of the RPC. Fair enough, but I should have thought that the RPC request for more information and clarification from the Department for Business and Trade could quite straightforwardly be met.
Professor Bogg: I support much of what Simon said. Focusing on the collective reforms, there has been scaremongering about re-unionisation of the economy and how radical this all is. You would think that we were going back to 1965 in terms of the reform of the strike laws, when actually we are probably going back to 2015 with a few tweaks. The minimum service levels framework is being repealed, but as far as I am aware it was never used. There was a prospect of its use once, but it was so inflammatory that the employer in the ASLEF dispute stepped back from using it. The Trade Union Act 2016 ballot thresholds will be repealed. In that context, and with a few proposed adjustments to strike law, this is not very radical. It takes the UK from a hyper-restrictive framework in comparative terms, to a restrictive framework in comparative terms. In terms of the overall international context, even if all of this makes its way on to the statute book, the UK will still have one of the most restrictive strike laws in Europe.
Professor Simms: I could not agree more. It sets out an agenda that would be regarded as incredibly restrictive in many comparator countries. I think it is better than what we have at the moment, which is such a restrictive context particularly for trade unions and strike action. Concerns have been raised by the International Labour Organisation about the UK’s restriction on strike activity. In my judgment this, as drafted, does not take us fully into compliance even with some of the concerns expressed by the ILO—it is still incredibly restrictive.
Greg Smith
Q
Professor Simms: We have to be realistic about the resource capacity of our trade union movement at the moment. There are certainly things in the Bill that will make life simpler for trade unions—not necessarily easier, but it will require less resource to, for example, organise for a ballot, or to organise a re-balloting during a period of industrial action. At best case, that frees up some capacity to get on with the nitty-gritty of representing workers in the workplace and solving workplace problems. I cannot prove that that is going to happen, obviously, but that is certainly more than possible. But will it free up sufficient capacity to try and organise in the breadth of the retail sector, for example—lots of small employers? Personally, I think that is unlikely. I do not think that the UK trade union movement has that resource capacity at the moment.
Professor Deakin: Historically, what drives unionisation and strike levels is the economy. High inflation drives strike action and tends to drive union membership. Union membership, union activity and strike activity are highly sensitive to the wider economic context, which at the moment probably does not favour a massive increase in union membership. I would be very surprised if this particular measure moves the dial much on membership, and I do not think it will move the dial much on industrial action either.
What could happen, especially with the arrangements for sectoral pay bargaining, is that many workers, whether or not they are in a trade union, would benefit from sector-wide collective norms. That would be the case where the arrangements come in for two sectors that are mentioned in the Bill, and hopefully that is just the start. Other European countries and many countries outside Europe have sectoral collective agreements that, in effect, set a floor for an industry or sector. I am not sure whether you would call that re-unionisation, but I think the coverage of collective agreements is perhaps more important than simple membership, although unions depend on membership for their finances. The economic effects will turn very much on coverage.
Professor Bogg: As I said, the reforms to strike law are fairly modest, and I think that is true of collective bargaining laws. There are two incremental nudges towards sectoral institutions in two sectors, and there are some very modest tweaks proposed to the statutory union recognition procedure—lowering the preliminary membership threshold, potentially, and removing the majority support likely threshold—but it is difficult to see. I do not know what re-unionisation means, I must confess, but I will be very surprised if you see a radical upsurge in union recognition as a result of these very sensible but cautious changes in the legislation.
Justin Madders
Q
I want to ask you in particular, Professor Deakin, about the impact of the regulations on increased productivity and innovation—the general economic benefits. Do you think that that will have a positive impact on such issues?
Professor Deakin: I think so. The evidence internationally is that there is a strong correlation between stronger labour protection and both productivity and innovation. I think that sentiment in the research community has shifted very much in the past 20 years. That is partly because we have better data and probably better methods. Certainly, a generation ago, the World Bank was quite hostile to the idea of labour law and said that labour laws, in aiming to help workers, might harm them. That, however, is no longer the World Bank’s position. The World Bank has said that there can be too little labour law in an economy—too little protection for innovation and productivity.
Of course, productivity has many causes, and the way we regulate labour is only one issue. If we are talking about labour law, though, these reforms are essential to help improve the productivity position. Will this law on its own lead to an improvement in UK productivity? Not necessarily, because that depends upon how we regulate other areas of the economy, and that is affected very much by the way corporate governance works and also by training and other aspects that are not all covered by the Bill. But is this Bill essential in the area of labour law for improving economic performance? Absolutely. Does it go in the right direction? Yes, it does.
The research we have done in Cambridge, which I mentioned in my written evidence, shows that, on average, strengthening employment laws in this country in the last 50 years has had pro-employment effects, for various reasons. That is, as I said in my notes, not a predication or a forecast, but historically in this country, stronger labour laws are not associated with unemployment.
Professor Simms: Could I chip in as well and emphasise the point that Simon has just made about skills and training? Skills and training of managers—the professionalisation of managers—and of our workforce are really crucial ways of shaping productivity and innovation. They intersect very strongly with some of the issues in the Bill.
In general, the push to professionalise management of work—the managerial decisions—is a really important part of that more complex story that Simon has just spoken to. The signals through the law, but also through other areas of policy, to managers, organisations and employers about the professionalisation of their management are a really important thing that the state can do to support that general up-tick in productivity and innovation in general.
The Chair
Good afternoon. Thank you very much for coming along. Would each of you introduce yourself, please?
Luke Johnson: My name is Luke Johnson. I have been an entrepreneur and investor for the best part of 40 years, and I am currently the co-owner and the director of various businesses employing roughly 10,000 people.
Michael Lorimer: I am Michael Lorimer; I am the chief executive of the DCS Group. We employ about 600 people. We are in the fast-moving consumer goods sector, and we have the world’s biggest non-food clients. When you buy shampoo, shower gel or Fairy liquid from a convenience store or a discount retailer, we have probably distributed it and indeed made some of it, because we have a manufacturing division as well. That is quite unusual, I think—for a distribution business to actually invent a manufacturing business—in the last 10 years. We are based in Oxfordshire and Redditch, in Worcestershire.
Greg Smith
Q
Luke Johnson: I think you need to put it in context. From my various decades of creating businesses and jobs, I would say that we now have among the highest ever levels of tax burden and of overall regulation and legislation, and that this is a high-cost country. Job vacancies have been falling for at least 15 months. Unemployment is going up. Interest rates are massively higher than they used to be. Insolvency specialists tell me that they are rubbing their hands because they think that next year will be very busy. I would say that even if we do not suffer a technical recession next year, it is odds-on that there will be a serious slowdown. I am at the cutting edge of businesses, and, in some cases, some of my companies might not survive next year. I do not know how many Committee members have ever been involved in starting and growing a company and keeping it from failing, but it is not much fun.
The idea that now is a good moment for small and medium-sized businesses—which, let’s face it, are the future; they are the ones that disproportionately innovate and, actually, disproportionately create most of the jobs. They are the ones that are the next big businesses; every business started as a small business once. On the idea that companies that can barely afford any form of HR could stomach a big new Bill of 150 pages and 28 measures, they will not even have time to read it. The idea that they can adopt something like this when they are facing quite possibly—we have to remember that they have the hangover of two years when so many of them were shut. They have legacy debts and energy prices. Electricity prices in this country are the highest of any developed nation. Try manufacturing things here now. The timing of this is beyond belief, and that needs to be put into context. Whether £5 billion is the real cost or not, it is death by 1,000 cuts because you never know until you get a big tribunal what the real cost is, for example.
Michael Lorimer: I agree. Obviously, a Bill like this does not exist in splendid isolation if you are running a business. Luke has identified the increased costs of doing business, which are severe and impact small to medium-sized enterprises most, which, as you will be aware, represent 80% of the employment in this country. There was the news yesterday about the White Paper, “Get Britain Working”, and as a top line, I am very supportive of that. I think that is absolutely brilliant. Getting 2.8 million people back into work is something I am very passionate about. In Banbury, we are beside an area of deprivation, with a lot of people on benefits, and a lot of young people who are feeling quite depressed about life. We would love to be offering those people jobs—I cannot emphasise that enough. For six months of the year we have temporary staff coming in, and we are very glad they come—they come from different countries, work very hard and do great work for us.
My concern, without being able to give you a number on it, is that for some of the riskier hires that might come from the areas around where our business is based—in other words, people not in education, employment or training, kids who have not worked before, or people who have been unemployed for a long time; you hear on the radio every day that people in their 50s cannot get a job—businesses will be very slow to take a risk because of the day one legislation that is coming down the track. We have an HR department, so we can deal with this to some extent, but as you slide down the road and find businesses that employ maybe less than 20 or 10 people, there will be deep concerns and perceptions that this is just too expensive and scary.
I was hugely encouraged by the White Paper—I think the top-line aspirations are absolutely the right ones. It is the same direction of travel, towards 2 million jobs, that the Jobs Foundation have published a report on this week, and that the Centre for Social Justice are focused on. I would exhort all of you politicians, regardless of your colour, to get behind the concept of getting Britain working. But my fear is that this torpedoes a lot of those plans—genuinely, that is my fear.
Greg Smith
Q
Luke Johnson: We are still grappling with the fallout from the Budget. There are millions of pounds of additional tax that some of my companies will have to pay, and a 6.7% increase in the national living wage, when average inflation is 2% or 3%. As for the idea that many businesses have already given deep thought to this new piece of 150-page legislation—when we already have such things as the Employment Rights Act 1996, the Equality Act 2010, the Health and Safety at Work etc. Act 1974, and many other pieces of legislation—I dare say that large companies have given it some thought, but most of the businesses I am involved with are not so big. I think they will wait and see what the final result is before trying to measure whether it leaves the business smaller.
With any piece of legislation like this, we have to remember that it is not just the current jobs affected, but the unseen jobs and opportunities that were never created. I urge you to look at the fact that, for the first time in many years, the number of businesses being created in this country has been falling or stagnant for five years. That is more or less the first time in decades. If we lose the full employment we have enjoyed and the enterprise economy that we have managed to create—I believe it to be much more fragile than some might believe—it will be incredibly hard to get back. Jobs do not just fall from the sky. They appear because companies are created by risk takers, and they take a risk with every job they create. Jobs only exist because they are helping that business to progress, and 80% of jobs are nothing to do with the Government—they are private sector. If you crush the private sector, you crush jobs. All the research shows that the single most important ingredient for a happy society is jobs. Without jobs, you do not have civilisation.
Michael Lorimer: Our turnover is in the public domain, so I can share it with you. We will probably turn over about £370 million this year. We are in a high-turnover, very tight-margin business, so if we make £10 million net, that is about the height of it. It is very difficult to estimate the increased cost of national insurance contributions and the national living wage, because not all the details are yet clear, but we think it will be somewhere between £1.5 million and £1.8 million. That is quite a big chunk out of our net profit.
We do not have a huge problem with it. We are a company that believes strongly in creating prosperity. The national living wage is something that our hearts have no problem with, because we would like to see people getting paid correctly, but we have to mitigate that. That is something that we just have to get on with. Our company has grown successively every year since it started 30 years ago, in top line, bottom line and people numbers.
I need to stress this again to you: the passion that we have is growth and job creation. When we see people coming into the business, working their way through it, earning more money, developing their career and prospering, that is what brings us the greatest joy of all. My concern, which I have to repeat, is that businesses smaller than ours—following on from Luke’s point, we were a small business at one stage—are going to find it very hard to get on that growth trajectory.
Justin Madders
Q
Michael Lorimer: From my perspective, there is a pretty good balance between employer and employee at the minute. I am sure you could unpick that, and there could be cases for either side, but as somebody who runs a business in, quote unquote, a “fast-moving environment”—in fact, Luke Johnson’s business is much faster-moving even than ours—where you are focusing on driving your business and trying to get results, I think that there is actually a good balance. I am not particularly in favour of tinkering too much with it. That is my personal view.
Luke Johnson: I would slightly differ, in that I think some areas are increasingly onerous for employers. Increasingly, when I talk to entrepreneurs, they are looking to outsource, offshore or automate rather than employ people. Not all of that is legislation and regulation; post furlough and lockdowns, there is a vast amount of talk among employers and owners of businesses about workforce motivation. That goes back to a point that Michael made earlier about the number of people not in work who are of working age and able-bodied. I think this is an issue for society as a whole, and I think a happy society is one in which people are productively occupied.
I am surprised that you say that many employers want greater protections for their staff. They are very entitled to give them to them if they want. They do not need to rely on the Government for that; they can just give them better contracts if they want.
There are a number of concerning aspects to the Bill, which could be counterproductive if the objective is higher living standards. As I understand it, this Government’s priority is wealth creation, prosperity and jobs. Ultimately, although I do not believe that this legislation will be devastating to employers, I think it will be damaging for job creation and therefore counterproductive to wealth creation and to achieving higher standards of living.
The Chair
Sorry; I think that is enough. Perhaps if you have more to say, you will be able to bring it out in answer to questions.
Greg Smith
Q
John Kirkpatrick: I am not sure you would necessarily expect me to answer that question directly, Mr Smith. Nevertheless, I will say that yes, you are quite right: impact assessments are very important to us.
Let me say a bit more about that in the context of the Bill. As an example, I will take some of the provisions designed to improve opportunity and to regulate particular forms of contract. We know from our work that women and disabled people have lower rates of employment than men and able-bodied people, and we know that younger workers are more likely to be in zero-hours contracts than workers of other ages, and so on and so forth. The measures in the Bill that are designed to protect the interests of those people with protected characteristics may well be beneficial to them, but not if the result is that those jobs then vanish rather than improve.
What I would put back to the Committee, and potentially to the Government, is the real importance of assessing up front the likely implications of the measures that Parliament wants to put in place. If it does enact the measures, subsequently reviewing and monitoring them to know what impact they have actually had would be really important. I should probably put in my advertisement, at the end of that comment, that it seems to us that only if they do that will the Government be fulfilling their obligations, under the public sector equality duty, to assess the impact of the things they want to do on those in whose interests they seek to act.
Margaret Beels: I would address the question in a similar way, in the sense that when we look at the labour market, we see the job situation being very flexible, but one person’s flexibility can be another person’s precariousness. We are about to publish some research—in fact, we will publish it tomorrow—that is based on a survey of workers, which demonstrates that about 10% of workers are in precarious work and about 8% of workers get stuck in precarious work. That is the matter that needs to be addressed.
Greg Smith
Q
John Kirkpatrick: The answer is that it is hard to tell. You have already heard evidence on that—I heard some of the evidence this afternoon and you have heard other evidence in other sessions—from others who are arguably better qualified to answer the question than I am. As I say, I encourage you as a Committee to encourage the Government to ensure that it thinks that point through carefully, as you consider the Bill, and to bear that advice in mind as you scrutinise it.
Margaret Beels: My office has not done that analysis and I would be guessing if I answered the question.
Justin Madders
Q
Margaret Beels: I took on this role in the expectation that there was going to be a single enforcement body, which the previous Government had referred to but did not bring about. I was strongly supportive of the creation of a single body and accordingly I am supportive of the creation of the fair work agency.
From my perspective, which involves looking at what has worked under the existing arrangements and what could work better, I went back and looked at the recommendations in the strategy that I most recently published, on 11 November, and it had 12 recommendations. I looked at them and considered how things are working out now under three bodies with different governance, different plans and different ways of doing things, and whether I think that under a fair work agency regime those things would be done better. A fairly quick assessment is that half of them would definitely be done better; the other things would probably be done much the same. The ones that relate to having a better joined-up approach, to greater efficiency and to better sharing of information among bodies are the things that I think the fair work agency will do a lot better.
The Chair
Dr Stephenson, would you please introduce yourself briefly?
Dr Stephenson: Thank you very much for inviting me here this afternoon. My name is Mary-Ann Stephenson. I am the director of the UK Women’s Budget Group, which is a feminist economics think-tank that works to analyse the impact of economic policy on women and men, and on different groups of women and men.
Greg Smith
Q
Dr Stephenson: We think this Bill marks an important step in the right direction in improving the rights of women in the workplace. We particularly welcome the provisions on zero-hours contracts, which will benefit over half a million women. We also welcome the changes to statutory sick pay; 73% of those who currently do not qualify for sick pay because they earn too little are women.
We welcome the fair pay agreement in social care—I know that the previous speakers talked about social care, and it would be good to talk a bit more about that. Obviously, women are the majority of workers in the social care sector, but they are also the majority of those needing care. Improving pay and conditions for social care workers will also have a beneficial impact on the recipients of care, because it will reduce turnover in the sector, which is a really big problem at the moment. There would also be a knock-on impact on unpaid carers, the majority of whom are also women—care is very much a female-dominated sector.
We welcome the improved day one rights to paternity and parental leave. These are often seen as particularly beneficial to fathers and partners, but we believe that women will also benefit from them. Women’s unpaid work is at the heart of their economic inequality; women do 50% more unpaid work than men. The time when a child is born is often the point at which the distribution of unpaid work gets fixed. Most parents go into parenthood thinking that they want to have a more egalitarian sharing of care than maybe their parents did when they were growing up. But as one person described it to me, “You wake up one day, and you suddenly find yourself back in the 1950s,” because of the very limited rights that fathers and second parents have. So we think that this policy will benefit women as well.
We welcome the greater protection against pregnancy and maternity discrimination. We know that you heard earlier this week from the Fawcett Society and Pregnant Then Screwed about flexible working and sexual harassment, and we very much support their positions.
There are some areas where we would like the Bill to go further. On statutory sick pay, for example, we think that the Government needs to increase the rate. The low rate at the moment means that even those who are entitled to it often continue to go to work when they are ill, which is not only bad for them, but bad for public health—
Greg Smith
Q
Dr Stephenson: At least at the level of maternity pay, for example. We are one of only four countries in Europe that does not extend some right to sick pay to self-employed people, so we think we should do that.
We were disappointed that the Government went back on their original proposals that people who were previously on zero-hours contracts who had shifts cancelled at the last minute should be reimbursed for those shifts. That is a particular problem for women, who often have to arrange childcare if they are in paid work, so having a shift cancelled means not just the loss of the pay, but paying out for childcare.
We think that this is a missed opportunity to improve rights to maternity pay—we know that that is under review—but particularly to deal with the discrepancy between statutory maternity pay and maternity allowance for people claiming universal credit. At the moment, statutory sick pay counts as pay for the purposes of universal credit, but maternity allowance counts as a benefit, so you lose universal credit pound for pound. If you are not entitled to statutory maternity pay and must go on maternity allowance, you are basically losing whatever money you get off universal credit. We are also supportive of the call from the Fawcett Society and Pregnant Then Screwed for a duty to advertise jobs as flexible.
We think that underpinning all this is the problem with our civil legal system; having improved rights at work is only as important as your ability to exercise those rights. Since the reduction to civil legal aid under the Legal Aid, Sentencing and Punishment of Offenders Act 2012, the only area of employment law that is covered by legal aid is discrimination law. Many people do not even know that they have a discrimination case until they see a lawyer in the first place, so if this Bill is to have the effect that the Government want, they need to look at provisions around civil legal aid.
Greg Smith
Q
Dr Stephenson: Yes, that is something that we have also called for. This is where a woman loses a pregnancy before the point at which it counts as a stillbirth. Late pregnancy loss can be extremely traumatic and have health implications for women as well as psychological implications, and we think that the right to paid leave in those circumstances is really important.
The Chair
We now come to the finale—the Minister. Can you briefly introduce yourself for the record, please?
Justin Madders: Good afternoon. My name is Justin Madders. I am the Minister for Employment Rights, Competition and Markets. I also state for the record that I am a member of the GMB and Unite trade unions.
Greg Smith
Q
Justin Madders: Thank you for the question. I think the first thing to say is that it is not that unusual. In the last three years, there have been 10 red-rated Bills. Obviously, as the shadow Minister, you will be aware that it was your Government that introduced those. I think there is a challenge here that that all newly elected Governments face: obviously, we have a clear manifesto commitment to deliver on our agenda to make work pay and a clear manifesto commitment to introduce the legislation within 100 days of taking office. That means that, by definition, there is not the time and scope for the normal dialogue and informal conversations that you would get between the Department and the RPC before the final impact assessment is published. I think there is a fundamental challenge there.
As you would expect, we undertook quite a lot work in opposition to develop our policies, but because that is not part of the formal process, we were not able to take that into account. The alternative was for us to wait six or 12 months before we got that impact assessment into a position where the RPC was happy with it, and I do not think the public would really forgive us for having that hiatus between taking office and legislating.
It is also worth saying that, if you look at the individual assessments, two thirds of them have been greenlit, so they are getting approval from the RPC. We acknowledge that there is more work to do on some of them, and we will continue to work with the RPC. I also have a little sympathy with some of the difficulties that the RPC had in coming to its conclusions.
A good example of that is the repeal of the Strikes (Minimum Service Levels) Act 2023, which the RPC has noted was red-rated when it was introduced as a Bill anyway. As that Act was poorly evidence-based in the first place, and has never actually been used since it came into force, it was very difficult for the RPC to have any real evidence on what the impact of a repeal would be. Our critique would be that the reason for that is because it was unworkable anyway, but I understand in the circumstances why the RPC would have some difficulty making a judgment on that.
On some of the other measures where it said that there was no evidence base, such as some of the equalities measures, we heard some pretty clear evidence both today and on Tuesday—for example, from the Fawcett Society and Pregnant Then Screwed—about some of the real impacts on individuals of the policies in the Bill. I would also say that I do not think there was any real evidence that there is not a need for this legislation. The general thrust from most witnesses was that this Bill would deal with some of the challenges in the labour market. Although not every witness said that, that was generally the case. Of course, as we move forward and get more evidence, we will happily work with the RPC to try to improve those reds to greens.
Greg Smith
Q
Justin Madders: I think it is important that we stick to our promises, and this measure was very popular with the public during the election. I think they wanted to see action quickly. We have had 14 years of atrophy and decline in the labour market—you are obviously not going to agree with that comment, but that would be our analysis—so the need to act quickly was there. A lot of these provisions will not actually become law for a number of months, if not years—in particular unfair dismissal, which we are saying will come in in autumn 2026 at the earliest. There is an awful lot more time to continue to engage and consult, and we intend to do that. Of course, because of the very detailed nature of employment law, a lot of it is developed in secondary legislation and also codes of practice. That is the completely normal practice, and that is why a lot of it is framed in this way.
Greg Smith
Q
Justin Madders: Yes, I do. I have to say, I did not agree with much of their evidence. I think it would be fair to say that they are outliers in what we heard while we engaged with businesses. Most businesses understood the importance of engaging and of enhancing workplace rights, and see the benefits of it. I can provide you with a list of all the organisations we have engaged with. It is certainly over 140 organisations. The majority of those are employers or employer organisations, so I think we have been pretty comprehensive. We are continuing that next week and will continue to do it for the rest of the Bill’s passage.
Greg Smith
Q
Justin Madders: I have sympathy with what was said there. The first thing to say is that the rates for maternity leave and allowance are set by the Department for Work and Pensions. I probably cannot say much more than that at this stage, although I have had some initial discussions with that Department about what we can do to reform this area, because we recognise that it is quite an outdated system.
Greg Smith
And on bereavement leave?
Justin Madders: Again, that is something I am sympathetic to. I understand that the Women and Equalities Committee is undertaking an inquiry on that at the moment, and we are going to see what it says.
Sarah Gibson
Q
Justin Madders: There were two questions there. On probationary periods, there will be more work done on that. The evidence that I picked up is that most employers feel that six months is about the right period. The reason why we have expressed a preference for nine months, which we are obviously engaging on anyway, is that we recognise that there will be occasions when people might be on the cusp of being hired or fired at that point and the employer just wants a little bit more time to work with them. We think that is a reasonable point, and we have responded to employers’ concerns on that.
As we move forward with this legislation, we will certainly be looking to ensure that all businesses, particularly small businesses, have readily available and easily understandable resources so that they know what they need to do. We do not want to pass a lot of laws that allow employers to fall into traps. We want them to comply with best practice, which is what we are trying to set out in this Bill.
Employment Rights Bill (Third sitting)
Greg Smith ExcerptsThursday 28th November 2024
(3 weeks, 4 days ago)
Public Bill CommitteesRead Full debate Employment Rights Bill 2024-26 View all Employment Rights Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 28 November 2024 - (28 Nov 2024)
Greg Smith (Mid Buckinghamshire) (Con)
Q
Claire Costello: We are very supportive of the opportunity provided by the Bill. As a co-operative, and a very old co-operative at that, the health and wellbeing of our colleagues is incredibly important to us. We are very supportive of the principles of what we are looking to drive for here, but the challenge around the detail needs to be looked at.
For example, what does it mean to have a probationary period that enables a colleague to join you and ensures, first, that you give them the right opportunities to develop and grow and, secondly, that, if they are not suitable, you have the opportunity to enable them to leave the business? I will give you a couple of stats. Of our leavers last year, 75% had been with us for less than two years, and 36% of the people we asked to leave the business had been with us for less than three months. That is a really good example that shows that it just does not work out sometimes.
Could the probationary period be a barrier with unintended consequences? Yes. Are there things you can do around that to minimise it? I would say so, but again, we need to make sure the detail of the Bill does not drive unintended consequences. It must leave enough flexibility for employers within the broader groups represented on the panel and for us. We want to support people from disadvantaged backgrounds and bring ex-offenders into the organisation. We are working very hard to support them across a number of areas, so we do not want that to be an issue. We would work really hard to make sure that it is not an issue at the Co-op, but ultimately, on a broader footprint, it is something to be mindful of.
Greg Smith
Q
Claire Costello: I think it is more about the fact that the Bill will drive more tribunals if people feel that they have a route to do that, so that might make people a bit reticent. There is also the timescale. We have a three-month probationary period, so nine months is fine, but there is a point about day one rights to leave. That does not stop you supporting a new starter into the business and, if it does not work out, being able to manage that exit, but it is about doing it without incurring significant costs at every single level. That does not mean just the formalised cost of going through an employment tribunal, but the time it takes to hear a case within the business. Good organisations make sure it is heard at different levels, and then a grievance is raised and you have an appeal. It is very time consuming to do it in the right way, but that is what we want to do. Again, it sucks up time, resource and cost within an organisation, when what you want is to spend the time enabling people to be successful, and driving productivity and driving the benefit for the business you work in.
Greg Smith
Q
Claire Costello: Not yet, because there is not enough detail for us to do that. We are really keen to see what the more detailed asks look like.
Greg Smith
Q
Claire Costello: Yes, there will be on-costs from the Bill. Do I think it is the right thing overall? Again, we are broadly supportive of where it is heading, but there will be on-costs in there.
Greg Smith
Q
Helen Dickinson: Thank you very much for this opportunity. We are probably going to end up violently agreeing with each other, but let us see how we go.
There is real alignment on the objectives of the Bill: to improve working practices, have the right culture between employees and businesses, and weed unscrupulous employers out of the system by targeting them. It is great to have the opportunity to talk to you. I am sure that, from a Co-op and a wider retail industry point of view, many responsible businesses are already undertaking some of the processes in lots of parts of the Bill—things like the right to flexible working—and I think everybody is supportive of and aligned on proposals like a single enforcement body.
Building on Claire’s comments, the challenge comes in certain areas where the devil is in the detail. Claire mentioned probation periods; what does the guidance and the framework for a fair dismissal process look like? I have a list: guaranteed hours, union recognition and collective consultation. In all those areas, there is some detail that we can delve into to see where the challenges might sit. It is about making sure that the implementation does not end up in the scenario where too much cost is added, or too much process is put in place that disincentivises employing people from a disadvantaged background or in the entry-level jobs that the industry is so good at providing. Part of that is in the Bill, but a lot relating to how some of these things will get implemented will be done through the consultation process that comes after. Shall I dip into guaranteed hours, as an example?
Greg Smith
Please do.
Helen Dickinson: A reference period is conceptually a good idea—the question is whether it is too short. I know that some people who appeared in front of the Committee earlier this week suggested that it should be slightly longer. I think requiring a business to offer the hours of that reference period in every single circumstance does not really take into account the peaks and troughs, the flexibility that retail businesses need or that lots of people who work in retail already have, and how the actual implementation could be framed to give people the opportunity to opt out or to have the right to request, as opposed to the right to have.
That is an example of where the implementation could be very onerous, very expensive and disincentivising, or, if it is implemented in a way that actually works for businesses and employees—because a lot of people value that flexibility—can create the win-win that the framework and the objectives of the Bill are seeking.
James Lowman: I agree with much of what Claire and Helen said, so in the interests of time, I will not repeat that. To give a bit more flavour on convenience stores, we see ourselves as an exemplar of flexible, local, secure working—98% of colleagues have a contract, and zero-hours contracts are used very little. More than a third of our colleagues walk to work. We are the ultimate local, flexible employer. Most requests for flexible working, whether in the formal, legislative framework or not, are agreed to, because if you have good people, you want to keep them in the business and you want to accommodate what are usually other responsibilities, which are often about care for children or older relatives.
Specifically on probationary periods and early rights, 84% of people who work in our sector have been there for more than one year. Most people who have been there for that period of time stay on. Half of people working in our sector have been there for more than five years, so we have a longevity of employment, but there is a spike of people who move on quite quickly because it is not right for them. Seasonality, of course, could cause that. There is a particular challenge when we are talking about encouraging our members, as we do, to look at bringing in people from typically underutilised backgrounds, whether that is care-experienced people, ex-forces or ex-offenders. We produced a document with the Retail Sector Council last year looking at opportunities for those people.
For everyone starting a business, there is always a chance that it just does not work out. It just does not transpire that it is the job for them. Sensible probationary periods—they do not have to be too long—will allow that to play out without undue risk to the employer.
The final point I would make is that in an independent business—we represent some large businesses, but 71% of convenience stores are independently operated—the person running the business is the finance director, the buying director, the marketing director, the operations director and the HR director. No specialist resource is being called on, so additional processes to manage someone leaving the business are particularly burdensome for smaller organisations who do not always have people like Claire and her colleagues to help them through that.
Greg Smith
Q
James Lowman: There are probably three things. First, those issues are becoming a challenge in the recruitment and retention of people. I understand that from the point of view of colleagues, who go back to their family and find that their family is not comfortable with them going to work in an environment where they can be subjected to violence, with inadequate support from the police and others. That is probably a generous assessment from me.
There are particular provisions in the Bill related to employers taking all reasonable steps around preventing harassment. That concerns our members, because, as they see it, they and their colleagues together are the victims of crime, so they then need to have responsibilities for how the 15 million customers a day who use convenience stores might behave. That needs to be very carefully brought out in guidance and regulations, in terms of what those reasonable steps are, because it would be unfair to put further burdens on businesses that are already the victims of crime.
I do not believe that the provisions in the Bill would make it harder to recruit on that basis, other than what we talked about in some cases, particularly where there is a higher-risk appointment and retailers are less comfortable making it due to the difficulties of moving that person on, if it was the right thing to do. Harassment is an angle on that, but the Bill’s provisions would not make markedly worse what is quite a challenging situation with recruitment.
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
Q
Claire Costello: As an employer, we are really pleased to see that it will level up. There are a lot of things in the Bill that we already do. We are delighted to have really good relationships with our trade unions, and we have had access to rights on day one, from a flexibility point of view, for a lot of years. It would be good to see that levelling up across businesses, but I will hand over to my peers here, because they speak on the industry’s behalf, whereas I speak on behalf of an organisation.
Helen Dickinson: I think the answer to the question is, “As long as we do not end up with unintended consequences for responsible businesses.” There are examples that we have already highlighted, and I am sure that we can find some more. The goal surely has to be to ensure that the detail of the measures is firmly targeted at the unscrupulous. That is good for everybody, because it levels the playing field and gets rid of poor practices. I think everybody here would be 110% aligned behind that.
At the moment, the risk is in certain parts of the Bill. There is obviously a very open and sequenced consultation process, so the most critical thing is the adequacy, the collaboration and the ability of unions, employers and Government to work together to ensure that we do not end up with those unintended consequences. I am sorry to say, “It depends,” but the answer is that it depends.
James Lowman: I agree: it does depend. Just to give you a flavour of how flexibility works in our sector, a lot of changes to shift patterns are from colleague to colleague, often through apps or WhatsApp groups. That is the reality of how shifts change. One of the people working shifts is often the owner of the store, so it is very much something that they are doing with those colleagues.
It is really important that the Bill, in wanting to codify and formalise some of those rights, which is good and fine, does not remove some of the flexibility and the informality, which is part of what gives flexibility on both sides. One of the reasons why we have great staff retention in our sector is that people want those local jobs where they have that flexibility; it fits in with their lives. It is really important that in framing regulations and guidance, we deal with things such as how businesses can respond to late changes in availability. There are often circumstances completely beyond our control—for example, there could be a massive delivery disruption or extreme weather changes. These are the realities of running a store.
Helen Dickinson: So does sickness.
James Lowman: And sickness, which we may come on to. Those factors are particularly challenging in a small store. If you have 16, 17 or 18 people working in a large store and you are one person down, that is a problem. If you have two or three people working in a shop and you are one person down, that is catastrophic in the context of that shift. That shift is important to customers, the other colleagues and the business. In enshrining greater flexibility it is important that we actually deliver greater flexibility, rather than inhibiting the flexibility that is already baked into the way we operate day to day.
The Chair
We will now hear oral evidence from Joanne Cairns, head of research and policy at the Union of Shop, Distributive and Allied Workers, and Liron Velleman, head of politics at Community. This session can continue until 12.40 pm.
Greg Smith
Q
The Chair
I should have asked you to very briefly—in a sentence—introduce yourselves. Will you do so at the start of your answers? Thank you.
Joanne Cairns: I am Joanne Cairns. I am the head of research and policy at USDAW, which represents over 360,000 members, mainly in the retail sector, but we also have members in distribution, food manufacturing, pharmaceuticals and a number of other sectors.
We do not share the concerns about the impact assessments. We think that the impact assessments demonstrate the impact of the Bill. There are obviously areas that need further clarification, which will be looked at through consultation. In terms of the impact on our members, we believe that it will be extremely positive, particularly for low-paid workers and women workers. The TUC analysis estimates that the reforms in the Bill will benefit the wider economy by over £13 billion a year, which it considers to be a conservative estimate.
Greg Smith
Sorry, £30 million?
Joanne Cairns: No, £13 billion. That was one of the more conservative estimates in the range that it looked at. That would be through reducing workplace stress, improving staff wellbeing, resolving disputes, reducing workplace conflict and increasing labour market participation.
Liron Velleman: My name is Liron Velleman. I work at Community union as the head of politics. We represent about 45,000 members across the economy, from steels, metals and manufacturing to the justice sector, education and early years, and the self-employed. Of course, we would always welcome any more evidence to show why the Bill would impact our members positively. Our members have been crying out for this change for the last 14 years, and even longer than that. It is important that we continue to make sure that the Bill does what it says on the tin, which is to make work pay but also to make our members’ and their families’ lives better.
Greg Smith
Q
Liron Velleman: At Community, we are confident that the Bill would represent a positive step for our existing members and would allow for greater coverage of trade union membership across the sectors we work in. For example, in the third sector or in education and early years—especially in early years, where, in some of the private provision of nurseries and early years settings, there is not currently as much trade union coverage—the Bill would make it easier for people to join a trade union and see the benefits of membership. On whether it would bring full unionisation of the economy, I am not sure it would necessarily go that far, but some of the onus is on trade unions to make sure that we are delivering, in a modern way, the best way for working people in this country to understand the benefits that they could receive by joining one of our unions.
Joanne Cairns: I agree with Liron. We have good relationships with a number of major employers where we are recognised. You heard earlier from the Co-op. We are recognised there and by a number of other major employers. However, across the retail sector, trade union membership is currently at around only 12%, which is a similar level to the rest of the private sector. Very often, the reason people have not joined a union is simply that they have not had the opportunity to find out about what a union does—nobody has ever asked them to join a trade union. We think that the rights that the Bill will bring in around access to workplaces will be particularly important. The Bill will also simplify the statutory framework around recognition, which is currently extremely burdensome and makes it very difficult for trade unions to gain statutory recognition, particularly with larger employers.
Justin Madders
Q
Joanne Cairns: Across the whole economy, precarious employment is a major issue. There is clearly a need for policy intervention in the labour market. The TUC estimates that one in eight people are in precarious employment, and that has risen by 1 million people since 2011. It has risen nearly three times faster than secure employment. That is certainly backed up by what we see with our members. Living standards have fallen quite significantly, and the impact of insecure work on our members is significant.
Of our members, 40% tell us that they have missed meals to pay their bills, 73% cannot afford to take time off work when they are ill, 15% struggle to pay their bills every month, and more than half have told us that financial worries are having an impact on their mental health. The level of statutory sick pay and the three waiting days for it is an issue of major concern for our members, as is having contracts that do not reflect the hours that they normally work. We welcome the Government taking action in those areas.
The Chair
We will now hear oral evidence from Nye Cominetti. We have until 1 pm for this panel. Could you briefly introduce yourself, Nye?
Nye Cominetti: Hello, everyone. Thanks for inviting me along today. I am principal economist at the Resolution Foundation, a think-tank based just down the road. Our mission is to improve living standards for families on low to middle incomes. As part of that, we research and write about the labour market, along with various other issues. We have been interested in the employment reforms since they have been under way.
Greg Smith
Q
Nye Cominetti: Sorry, is the question whether the impact assessment is fit for purpose or whether the regulations themselves are fit for purpose?
Greg Smith
Well, the Regulatory Policy Committee has said that eight of the impact assessments for this Bill—the separate columns—are not fit for purpose. Do you think the Bill had its tyres kicked hard enough before it went into Second Reading and Public Bill Committee?
Nye Cominetti: It is very hard to assess the impact of the Bill, as many of the details are yet to be determined. The Government said that they wanted to do this within their first 100 days, and they managed to do so, but that meant that they had to leave many “fill in the blank later” bits in the Bill, so I do not particularly blame the civil servants in the Department for Business and Trade for having struggled to come up with clear numbers on the costings and the potential impact.
For example, on the right to a regular contract, the impact on business will depend on how “low” is defined, in terms of the qualifying threshold that workers will have to reach. It will depend on how businesses have to go about making the offer to workers. It will depend on how regularly those offers have to be made, which relates to the reference period. In the light of all those unknowns, it would be very difficult for the Department to have come up with firm numbers. I think in the end they said £5 billion, but it is hard to know whether that is a good or a bad number.
I would not be so negative as to say that they have failed in any sense; I just think that they were given a very difficult job. As more detail becomes available, it would be great if the civil servants who have already put a lot of thought into the process could come back and say, “Now that we know a bit more about what is actually going to be happening, here is our updated view on what the impact of the regulations might be.”
Greg Smith
Q
Nye Cominetti: No. I can describe in general terms how we might think about the potential impact, but I think any researcher or economist who tried to put a number on it would be misleadingly specific or misleadingly accurate. Not only do we not know what the direction of the impact might be—it could be that there are small positive or negative impacts on the size of GDP—but it is very hard to get a sense of the scale of the impacts. If you want some kind of judgment, the impact on economic growth will probably be very low—very close to zero. My expectation is that it will possibly be negative, but that is an incredibly hard judgment to reach, because you can point to impacts in both directions.
It is very uncertain, but the important point to make is that that does not mean that we should not be going ahead with these reforms. We should not be pursuing only those reforms where we can say, “The impact on GDP will be x,” even if not very confidently. One of the first things that this Bill should do is improve working lives for workers. It may be that we cannot put a monetary value on that, or that there is no associated impact on GDP, but to me that is the main and the first reason why many of these reforms should be undertaken.
Greg Smith
Q
Nye Cominetti: The same number, would be my best guess.
Greg Smith
What do you base that on?
Nye Cominetti: Internationally, we can draw scatter plots of the employment level in a country and the extent of employment regulation, and basically those lines come out flat. You have some countries with very high employment and very high levels of regulation, and some countries with lower employment and high regulation, so there is no clear relationship with the employment levels across countries. That is confirmed by the OECD, which has done lots of detailed work looking into the impact of periods when countries have either rowed back on reforms or expanded them.
What we do see in the employment data is that when you beef up the reforms around dismissals for individual or collective workers, you tend to see lower hiring rates. So the rate at which workers move around the economy will probably slow down if you make it significantly harder for employers to fire workers, and that gives rise to potential implications for productivity growth. Now, I still think those effects will be small. When the Office for Budget Responsibility, in one or two years’ time, starts putting the numbers into its forecasts, I expect them to be very small indeed. My expectation is that the employment level will be very, very narrowly lower if anything.
To give you some sense of scale, the OBR said it thinks that the employer national insurance contributions bill will be about £25 billion, and that that would lower the employment level in this country by 0.2%. The DBT said that it thinks the direct costs of the measures, including sick pay, are in the order of magnitude of £5 billion. If you compare those numbers, that starts to give you a sense of the scale of potential employment effects that we are talking about. I am sorry not to give you a more exciting answer, but my best guess is that the impact on employment levels will be small.
Justin Madders
Q
Nye Cominetti: It is a good question. One of the ways that I like to think about this package of reforms is that it extends to low-paid workers the kind of everyday flexibilities and dignities at work that people in professional jobs such as me and you take for granted. It is not the case that all low-paid workers hate their job or face the risk of losing their job every week, but it is the case that they experience a higher level of insecurity than higher-paid workers do.
You can look at that in various ways. In recessions, low-paid workers are more likely to lose their job, so they face a higher risk of losing their job in downturns. They are also more likely to rely on statutory sick pay if they fall ill, so for many low-paid workers, falling ill comes with an income shock. That is not the case for someone like me: if I fall ill, I go home and pick up an online meeting or two if I can, but if I cannot, I will get paid as normal. That is not the case for many low-paid workers, so that is a real insecurity.
Obviously, there are zero-hours contracts as well. For low-paid workers, I think roughly one in 10 is on a zero-hours contract. For higher-paid workers—the top fifth in the hourly pay distribution—it is a vanishingly small number and very uncommon indeed. I am sure that you have heard plenty of evidence about the kind of impact on security that zero-hours contracts can bring to some—not all—workers.
The most illuminating statistic is probably that 2 million workers say that they are fairly or very anxious about unexpected changes to their hours of work. You might think that that is because that comes with not just an impact on their life—“I do not know which days I’m going to be working next week, and I have to make it work alongside childcare”—but a potential income risk as well. In many respects, the working lives of low-paid workers are less secure than those of higher-paid workers. My hope is that some of these measures will go some way to redressing that balance.
Employment Rights Bill (Second sitting)
Greg Smith ExcerptsTuesday 26th November 2024
(3 weeks, 6 days ago)
Public Bill CommitteesRead Full debate Employment Rights Bill 2024-26 View all Employment Rights Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 26 November 2024 - (26 Nov 2024)
Greg Smith (Mid Buckinghamshire) (Con)
Q
Good afternoon. May I start with Mr Simpson? UKHospitality has been quite critical of this Bill in the media and in a wider setting. You have just said you represent a very large number of people. Do you think after this Bill is passed and becomes an Act—I think we can safely assume it will, with the parliamentary arithmetic at the moment—there will be more, or fewer, people employed in hospitality in the United Kingdom?
Allen Simpson: I would slightly reject your characterisation. I think in general we agree with the principles behind the reforms, and many of the substantial reforms themselves. There are areas where we will have to nuance the detail of things like reference periods and zero-hours contracts—we will get into that, I am sure. My bigger concern, however, is the aggregate costs of what we saw in the Budget with the regressive impact on lower earners in particular. Will this create more or fewer jobs? I think the Government’s analysis suggests that it is fewer, but let us balance that against making sure that workers’ rights are protected.
Greg Smith
Q
Allen Simpson: I have a red, amber and green list in front of me, so I can tell you what is on the red if that is useful. First, it is the aggregate cost: the cost of this, alongside the employer national insurance and national living wage increases, is going to be a barrier to employment. You can take the 50,000 job losses that the Government’s impact assessment describes or the 100,000 that Deutsche Bank have, but there is an aggregate cost question.
More specifically, there is a question around the variation of contracts—we can talk about that in more detail—and making sure that that protects against what we can probably call a P&O event. Equally, we need to allow for like a restaurant moving from one high-street premises to another so that contracts are not accidentally novated. There are questions around how we manage union thresholds, which we need to think through in detail. Those would be my reds, but equally, I have ambers and greens as well.
Greg Smith
Q
Allen Simpson: There is something around statutory sick pay, which is worth considering. There is a tendency, when we look at what a good job means, to build around the paradigm of an office, when working in hospitality—not unlike my wife, who is a nurse, working in a medical setting—is a different way of working. We need to think about whether or not sick pay kicking in from day two might be more appropriate than day one. Equally, I have an amber around the notice of shifts and how we manage things like major events at Ascot, Wembley or anywhere else. You did not ask, but I will say that for green, I am very supportive of changes in general to zero-hours contracts.
Greg Smith
Q
Allen Simpson: It is about 17% in total. If you look at who those people are, they are largely who you would think—students and people with caring responsibilities. I think about my mum, who worked on what we would now call a zero-hours contract while raising me and my brothers. That 17% is going to skew younger and largely skew female. There is a really interesting question around making sure you have a legal structure that allows people who want to work flexibly to do it, but also making sure that the people who want to work in a more settled, structured way—maybe because they have more responsibilities financially—to be able to do that as well. I broadly think the proposals in the Bill are the right ones.
I have a question about the reference period. I know Ireland has a 52-week reference period for estimating what your set of regular hours is, which possibly feels too long. I have always held 26 weeks in mind as a number which allows you to cope with things like seasonal working, but equally allows the worker the right to choose whether they want to work flexibly or in a more fixed way.
Greg Smith
Q
Allen Simpson: I come back to the point that you need the right legal structure. I think it is legitimate for someone who in practice is working 30 hours a week regularly and has been doing so for the last year to ask for that to be reflected in a different form of contract. That is absolutely right. It is worth saying that the data shows—and it does not matter how you look at this—that most people on zero-hours contracts are happy with that. In fact, if you advertise a zero-hours contract, you will get more applicants. To a degree, as long as it is in the gift of the employee to say, “Well, I am working these regular hours and I want that reflected in a permanent contract”, that is the right balance. However, it is important that the Government move their thinking, as they have, to recognise that zero-hours contracts are a really important social fairness point because they allow access to work for people who cannot necessarily offer their employer set hours every week—again, I come back to my mum when I was a kid. Having that distinction in law is really important.
Greg Smith
Q
Neil Carberry: I will not repeat what Allen said about the aggregate cost of the Bill, but clearly it is an enormous piece of legislation, coming at a time when businesses—particularly consumer-facing businesses—have been through the pandemic, are carrying more debt and are struggling to drive the growth that the Government want. Among my members, as with many business organisations, the tone of the debate about the Bill was changed by the Budget. That was particularly around the shift on the threshold, which directly pushes up the costs of all of the people for whom an employer’s decision to hire is maybe more marginal. I associate myself with Allen’s comments on that.
More specifically, for those who are not familiar with it, our sector places 1 million people into new permanent jobs every year, but it placed 1 million people as temporary workers into workplaces today. So I come at this from the point of view of what do those people need to have good, positive, healthy working lives. Colleagues may remember the attempt to change the conduct regulations to allow agency workers to replace striking workers, which we opposed, because at the REC we believe in protecting temps and putting them in the right space.
The most important thing for our sector is the proposal to apply the same tests and rules on zero-hours contracts to agency workers as to directly employed workers. I will be really frank about that: there is a power in the Bill, we have been through the consultation, and we cannot see how any of the approaches in the consultation work. For some of the reasons that Allen has set out, agency workers are well protected. They benefit from the Employment Agencies Act 1973, from their own set of conduct regulations—the Conduct of Employment Agencies and Employment Businesses Regulations 2003, passed by the last Labour Government—and from the Agency Workers Regulations 2010.
There is a lot we can do to deliver the Government’s commitment to more certainty for agency workers—it is just not by applying the powers in the Bill. We fear that the Government are trying to avoid direct employers moving to agency to avoid the powers in the Bill. A few direct employers doing that is not worth damaging the employment prospects of 1 million people. For instance, if a supply teacher in a school has worked the autumn term to cover a sickness absence, and then the absent teacher comes back, we cannot see how giving that supply teacher a right to a contract from that school is good for the school or the supply teacher. Ultimately, we think that we will just see a move to using more overtime and lengthening the working hours of existing staff. That will be net negative for the workforce.
I think there are things that we can do on the zero-hours rules to protect agency workers, but it is not applying the proposals in the Bill. More generally, I think our members would say that the Bill feels a little undercooked in its thinking. I think it is a very quick Bill, and that there is quite a lot in it that employment lawyers and our members are looking at and thinking, “How would that work?” A classic example would be the collective consultation sections of the Bill. I do not think it is in anyone’s interests for large companies employing thousands of people to be stuck in perpetual collective consultation when they are shutting down one site with 20 people in it. That is just an example of one of the things that maybe need to be worked out through regulation—lots of this is in regulation—but we need to ensure that we are not putting up barriers to employment with the Bill.
Justin Madders
Q
Allen Simpson: It is more about the unknown. Again, reasonable notice is an important principle and there should be protections. I think that the challenge will be—I notice, by the way, from what I understand from having read what is, again, a complex and lengthy piece of work, that the Government are intending to leave it to case law and employment tribunal systems to figure out what “reasonable notice” means. In general, with different sorts of work, it is reasonable to say that there are different versions of what “reasonable notice” means. If I were going to go and work on an oil rig for three months, I would want more notice of a change of shifts than if I was going to work in the local pub. Therefore, I think it is partly about figuring out what the right starting position for notice is. It is partly about reflecting differences in things, such as whether it comes with a residential element; there are questions around that.
Then there are some practical things that I think will come out in the wash, but do need considering, such as shift swapping. What if two chefs say, “Do you mind covering Saturday, because I want to go out with my friends?” “Yes, of course; that’s fine.” Is that allowed, or can that decision only be taken outwith that notice period? There are also questions around other things. What if you put out a message saying, “There is a shift available; does anybody want it?” Have you made an offer of employment to everybody you have put that message out to? Is there a time after which you are not allowed to do that? One last thing: what if somebody agrees to move their shifts around—so you say on the Friday, “Do you mind coming in this Saturday and you can have next Saturday off?” “Yes, absolutely. Fine.” Is that acceptable?
Therefore, there are there are some practical questions about, first of all, the principle of different suitable notices of shifts depending on different forms of work, and about some practicalities, which I am sure are solvable, around the management of it.
The Chair
Good afternoon. We will now hear oral evidence from Jamie Cater, the senior policy manager for employment at Make UK, and Jim Bligh, the director of corporate affairs for the Food and Drink Federation. We have until 3 pm for this panel. Could the witnesses please briefly introduce themselves for the record?
Jamie Cater: I am Jamie Cater, the senior policy manager for employment at Make UK.
Jim Bligh: I am Jim Bligh, the director of corporate affairs at the Food and Drink Federation. We represent thousands of businesses around the UK in the food and drink manufacturing industry in every constituency in the country.
Greg Smith
Q
Jamie Cater: It is worth starting by saying that we welcome the underpinning principles of the Bill. UK manufacturers are committed to providing good, well-paid work. We think that genuine exploitation and bad practice in the labour market should be addressed, so we are supportive of a lot of what the Government are trying to achieve through this legislation.
There are specific measures that reflect policy recommendations that Make UK has made previously on behalf of manufacturers—for example, the extension of eligibility for statutory sick pay, making it an entitlement from day one of sickness and removing the lower earnings limit. We think that is the right thing to do, although we would like to see additional financial support for the smallest employers to help with the cost burden of that—a rebate scheme, as there was during the covid-19 pandemic. Our members also support some of the measures on things such as equal pay, parental leave and family-friendly rights.
I would list four areas of concern for us: two on individual rights and two on collective rights. On individual rights, we have some concerns around the detail of the implementation of the right to guaranteed hours. Some of that detail around the definition of regular working hours and the scope and structure of the 12-week reference period for that right to guaranteed hours will come forward in the secondary legislation. Secondly, we have concerns about the structure of the statutory probation period that will accompany the day one protection from unfair dismissal.
On collective rights, the first area of concern is around consultation requirements for collective redundancy and the impact that that will have on businesses, particularly large businesses, in our sector. We have concerns about the extent to which they will be required to consult and the potential disruption associated with that. The second area is dismissal and re-engagement, or fire and rehire, where there is a very high bar set. We think it is right that there is a robust approach to that practice and we have supported previous measures, such as the existing code of practice. But we are concerned that the approach taken in this legislation might restrict the ability of employers to take the action they need to take and that the way the measure is worded in the Bill is currently too restrictive.
Jim Bligh: We pride ourselves on being good employers of the half a million people around the country who are sector employees. We simply would not be able to feed our population of 70 million people without their commitment, hard work and dedication.
We know that a flexible labour market is the hallmark of a growing economy, and we are keen to protect that. We are very receptive to a lot of the ideas in the Bill, thinking about maternity and paternity provision, the pregnancy improvements, the lower earnings limit for the statutory sick pay rules—which is a sensible thing now we have moved away from that being a state benefit —and the recognition of the importance of flexible working, which our sector offers, too. We are strongly supportive of a single enforcement agency.
There are some areas we would like Government to look at in a bit more detail, and to consult fully with businesses in a way that follows best practice, through 12-week consultations in particular. We note with interest the concerns that the Regulatory Policy Committee expressed yesterday in its analysis.
For us, there are five areas where we think Government could work with businesses and unions to come up with a pragmatic solution that will help meet the objectives of both. For us, those are around unfair dismissal and probation periods; collective redundancies and similar concerns to those other witnesses have expressed today; some technicalities around zero-hours contracts and, specifically, definitions; flexible working and the admin burden that that poses for smaller businesses, now the burden of proof is shifting; and some concerns about the secondary powers of Ministers, which are quite wide-ranging, particularly on ballot thresholds. Broadly, however, we are receptive to the ideas in the Bill, and we look forward to working with Government to implement them.
Greg Smith
Q
Jim Bligh: Unfair dismissal and the probation periods are a concern for us. Most of our sector uses three or six-month probation periods now. About 85% of our members have told us that that is what they will use. About 6% use 12 months. There would be, I think, a concern about a nine-month period—the reduction from two years. It is critical that performance management from day one does not put a significant burden on SMEs in particular, and it is important that we keep the flexibility. If something is not right for the employee and not right for the employer—that performance is not there, that quality standards or whatever are not met—there should be flexibility in ending that employment relationship, on both sides.
What concerns us about the Bill’s proposals is that young people or people re-entering the workforce—which rightly is a priority for Government as well, and I note that Liz Kendall is speaking about this in the House at the moment—could be shut out under the changes that are coming through in the Bill. Our proposal would be to revert to a 12-month probation period. Obviously, people automatically qualify for unfair dismissal on some elements. It is right that those elements are retained, but it is important to us that you keep that flexibility from 12 months, that you have a light-touch approach and a process there as well, but also that we have enough time to implement.
What concerns us is that we are talking now about changes that will come in, I think, in two years’ time—that is a commitment from Government. That period is welcome, but we are not certain what the final provisions of the Bill will be. There is a long commitment to consultation, which we also welcome. Our proposal would be to implement two years after Royal Assent, to make sure that that concrete security and guarantee is there and that the goalposts are not shifted for employees and employers as they start.
Jamie Cater: I would echo that and agree with those comments. Stepping back slightly to look at the bigger picture, it has become difficult for us, with members, to separate out the impact of the legislation and the impact of the autumn Budget—the increase in employer NICs in particular, but in general the tax burden on businesses. That, taken together with the measures in the Bill, increases the cost and the admin associated with taking on people. There is a risk that that disproportionately impacts people on the edges of the labour market, I suppose.
It is very welcome that the Work and Pensions Secretary is today talking about how to reduce economic inactivity, particularly focusing on skills and health. We really support that focus, but there is a danger that the measures in the Bill, combined with the total cost impact, will make employers less likely to take that risk on someone.
On the protection for unfair dismissal in the statutory probation period, we typically hear from members that the usual approach would be to have a six-month probation period in an employment contract. They might then have a bit of additional flexibility for someone who is a borderline candidate if they need to be kept on probation for a bit longer, perhaps if they need a bit more skills training, experience or additional guidance in something before a firm decision is made about permanent recruitment.
Members often talk to us about effectively a six plus three model, where there is a contractual six-month probation period with the flexibility for an additional three months’ probation if there is a bit of uncertainty. The Government’s stated preference for a nine-month statutory probation period feels about right. That is probably the minimum; we would not want to see it go any lower than that. I think our preference would be 12 months, just to give that additional leeway, but nine months is probably about right for what we see reflected in standard practice from our members.
Justin Madders
Q
Jamie Cater: To come back to the impact of things like statutory sick pay, I think that will help with productivity and retention. We see a huge amount of feedback from member companies about their own investment in health and wellbeing, and the positive impact of that in keeping people in work, helping with productivity and reducing presenteeism. I think the measures on statutory sick pay will help with all those things, including reducing long-term sickness absence, reducing presenteeism and improving people’s productivity. I think all those measures are really positive.
However, what we need to be careful of, and what we are concerned about—going back again to the impact of the Bill alongside the autumn Budget—is that it does not reduce or restrict employers’ ability to continue to invest in all those other things that also improve productivity. We have heard concerns about impacts on training budgets, internal budgets for things like occupational health and wellbeing, and investment in technology and new machinery that can help workers to become more productive and efficient. There is a risk that some of the costs associated with the Bill and the autumn Budget mean that those internal investment budgets will be squeezed. There is an opportunity, through some of the measures in the Bill, to improve productivity and improve security for people in the labour market, but we need to ensure that some of those other measures are not undermining those benefits.
Jim Bligh: I agree with that as well, and I endorse everything that Jamie just said. I think that the statutory sick pay clarifications are particularly helpful, and the clarity on parental leave should be helpful too. Flexibility is also important, and we need to ensure that the flexible working practices that are already widespread in our sector, as I know they are in other sectors as well, are protected and clear. I think there are concerns that potentially outweigh some of those benefits, which we are very keen to explore with the Government through the consultation periods.
Greg Smith
Q
Gemma Griffin: Just to make it clear, we are talking about seafarers, so I am not here to represent the shore-based colleagues in our organisation. As it stands, I do not believe—my learned colleagues beside me have more experience with shore-based stuff—that our seafarers are currently covered by the Bill. My understanding is that there is an opportunity today to talk to your good selves about ways or mechanisms by which we may be able to enshrine something for seafarers, so that they can be afforded similar rights and opportunities as shore-based workers.
The key point in the Bill currently relates to fire and rehire. That is the sort of stuff that we as DFDS are very pleased that you will be banning, and I hope that it does actually refer to seafarers as well. For us, that is the biggest concern among the many others that we have, as an operator that is simply looking for a fair and level playing field. That is particularly the case when we talk about the straits of Dover, where we move from UK territorial waters straight into French territorial waters, with no international waters where one might use the normal ways of international seafaring legislation. We are really hoping that we can capture some of the things that we believe our seafarers are at risk of losing if we do not extend the legislation to them in whatever way we can.
Greg Smith
Q
Gemma Griffin: Our land-based staff are already covered.
Greg Smith
But on the question about the unintended consequences of elements of the Bill—
Gemma Griffin: Do I see any unintended consequences for our land-based employees?
Greg Smith
Yes.
Gemma Griffin: No, is the answer, because we are very much trying to create a situation in which our colleagues have rights and are treated fairly. The most important thing is that there is a level playing field and that whoever operates in the same space as us, the law applies to them. If we are all UK-based and have UK contracts, I imagine that would be the case.
To make it clear, my area of expertise is seafarers. I am not really involved on the UK side, so I do not want to overreach and maybe show my absolute ignorance in that respect. I apologise.
Greg Smith
Mr Gray?
Martyn Gray: To clarify, I am a director of organising for a trade union, so I will answer from the perspective of whether the legislation goes far enough, if that is okay.
Greg Smith
Sure.
Martyn Gray: No, is the very short answer to that. It needs to go further in terms of protections for those who work at sea. There are still monumental gaps in the protections that are afforded to seafarers compared with the protections afforded to land-based workers, even under existing employment legislation, and those gaps still need to be closed up.
This legislation comes some of the way to addressing some of the challenges we saw in the wake of the decision by P&O Ferries to terminate, without notice and without consideration, 786 people in March 2022, but it still does not go far enough to place the rights and protections of those who work at sea on parity with the rights and protections of those who work in shore-based roles and with shore-based employment contracts. More still needs to be done, and more can still be done, that will allow for greater protections to be delivered for those who work at sea. That is fully within the remit of this Parliament to legislate for.
Mick Lynch: From my point of view, I do not think there will be unintended consequences. I hope the intended consequences go far enough, but maybe we will have to have more legislation. We had lots of legislation against the unions under previous Governments, so hopefully we can get more legislation in favour of workers and their organisations.
The Bill does not go far enough, but we can improve it during this process. One of the things we would like to see is the power for trade unions to get redress—injunctive power—against people like P&O, which was never considered. We were told that if we took action against P&O—and there was a slim possibility of it—we could be liable for all its revenue loss for every day of trading, which could have been up to £15 million or £20 million a day. That is impossible for workers and their organisations to take forward.
You have to remember that P&O deliberately broke the law to get rid of its workforce and to undermine good shipping companies. We have employers such as P&O and Irish Ferries working out of our ports that undermine good businesses. I just caught the end of the previous session, when the witnesses hoped that there would be a lifting of all boats—to use that pun—to create a playing field that is fairer. It will never be completely level, but it would be fairer on all the good businesses in Britain—British businesses and those working in Britain—to make the pirates, which is what we consider P&O to be, come up to the standards of everyone else doing business here. Businesses should treat their workers well, treat the environment well and treat their passengers well. If you do all those things, you will run a successful business despite a marginal increase in overhead.
Let us not forget that people like P&O are dramatically resourced by the richest people on the globe. P&O deliberately took that step to exploit our laws—as poor as they were, left to us by previous Governments—because it knew it would get away with it. What P&O has got to be aware of in the future is that it will not get away with it without consequences for its business and reputation. Unfortunately, the previous Government allowed P&O to shed its skin and leave it behind, along with all those people it made unemployed, and carry on as if nothing had happened. That is a shame on all those people who allowed P&O to do that.
Greg Smith
Q
Mick Lynch: Not particularly. We make arrangements with our employers—we have private sector employers and public sector employers—through collective agreements. I imagine that we will always create decent arrangements with all our employers, whether they are road transport, rail or maritime, about appropriate release for our people, so that is not a thing that concerns us overly at this time.
Martyn Gray: I have no particular concerns about the way facility time seems to be structured. I think overall it will prove to be beneficial. I know there are some in the trade union movement who would like to see more on that, but again, I think that, with the maritime aspect and the practicalities of working around that, what is proposed in the Bill is helpful.
Gemma Griffin: There is not a problem from our perspective. We see both RMT and Nautilus as partners in our endeavours to do the right thing for our people, so we are fully supportive.
Greg Smith
Q
Paul Nowak: I think this will be the biggest upgrade to workers’ and trade union rights in a generation. It is very likely that we will see increased unionisation as a result of the Bill, and I think that would be a good thing. Bodies as disparate as the International Monetary Fund and the OECD have talked about the benefits of unions and collective bargaining in modern economies—benefits in terms of improved productivity and business performance, but also benefits for workers in terms of increased pay, better access to things like skills and more equal and fair workplaces. I do not think there is a direct link; you do not pass a piece of legislation and trade union membership and collective bargaining go up, but the repeal of the Trade Union Act 2016 and the repeal of the minimum service level legislation—the strikes Act—and other measures in the Bill will help unions to organise. That will be good for employees and good for workers, but good for employers and good for the UK economy as well.
Greg Smith
Q
Paul Nowak: It is important to put that £5 billion into a figure; that is something like 0.4% of the overall wage bill. The TUC has published research today, again involving very moderate estimates. In the impact assessment, the Government talked about potential benefits to the economy from this Bill, in terms of things like improved staff retention, improved productivity and bringing back into work people who are currently outside the labour market—there are now 900,000 or so less people in the labour market than there were before the pandemic. At a very moderate estimate, we believe that that will generate £13 billion for the UK economy.
For a small number of employers, there will undoubtedly be increased costs. If you do not pay sick pay from day one at the moment, or if you use zero-hours contracts, it may well cost you more. Those benefits will transfer directly to low-paid insecure workers. I think it is really important to make the point that most employers do not use zero-hours contracts. Most workers in this country are entitled to sick pay from day one. This Bill levels the playing field for those good employers who, at the moment, are in danger of being undercut by those who play more fast and loose with the livelihoods of their workforces.
Maggi Ferncombe: From Unison’s perspective, the Bill means that in certain sectors, workers will no longer be dispensable. There are some really perilous conditions out there for some of our workers, and we all know that valued workers who are paid a good salary and have better security at work are more productive. In our sector, we find that the public service is then better for service users, it is better for society and it will be better for the economy.
Dave Moxham: I will be brief. We have a productivity problem in Scotland and across the UK, and that is largely because workers are not, either collectively or individually, being sufficiently engaged or consulted, and they are not being sufficiently used to drive productivity and success within their own workplaces. Trade unionism, in my experience, helps with that. We are day and daily inundated with problems in workplaces that are not unionised, which have to be dealt with in other ways. The employment tribunal is full of these situations. Our experience, and it is long held, is that trade-unionised workplaces actually avoid those problems. I would say that we are fortunate in Scotland—it is not perfect—to already have a Government who recognise that collective bargaining and fair work are drivers for success, and I very much hope that this Bill will add strength to that for us and see that approach reflected across the whole of the UK.
Hannah Reed: Thank you very much for the question. We represent working people—that is what trade unions are. Overall, we represent nearly 7 million working people within this country. Being part of a trade union brings clear benefits for working people. It provides them with better legal representation and representation in the workplace to resolve issues at work. It will often provide them with better access to training, and it will provide them with better career opportunities.
We very much hope that this Bill will encourage and enable more people to make the positive choice of joining a trade union, and that could be done by providing a right of access to millions of workers. Regrettably, the majority of workers in this country do not have the option at the moment to meet with a trade union in the workplace. We hope that the Bill, through measures on the fair pay agreement, the new negotiating arrangements on school support staff and the changes to statutory recognition, will enable more workers to have a say over their pay terms and conditions. We also hope that, through the introduction of statutory equality rights, the Bill will ensure that issues such as harassment, bullying, sex discrimination and unequal pay in the workplace can be properly addressed in this country to ensure that all companies meet those standards. We know there are good companies that meet good standards in the workplace, but we would like to see more companies and organisations meeting those standards, and we very much hope that this Bill is a starting point for ensuring that everyone has a decent working life.
Greg Smith
Q
Hannah Reed: There are already statutory definitions in legislation of who is a worker. It will generally be workers—in some instances, it will be employees—who will benefit from the range of rights in this legislation. Our trade unions are also looking forward to working with the Government on their forthcoming review of employment status, the purpose of which may well be to look at extending protections for self-employed workers, such as freelancers and others.
Unite represents a lot of self-employed workers in the construction industry who are not self-employed by choice, and they have fewer rights as a result. We would like workers who face a higher risk of injury in the workplace and who often lose out on pay and conditions, as well as freelancers and others, to have full employment rights. We are working initially from the definitions of “worker” and “employee” that are set out in law, but we very much look forward to the Government bringing forward measures to extend protections to all working people.
Greg Smith
Q
Paul Nowak: Can I make a point first about the symbiotic nature of the relationship between Labour and the unions? We certainly have a shared history and shared values, and in some cases we have unions that are affiliated to the Labour party. The TUC represents those 5.3 million workers regardless of who is in government, and it does not have a formal relationship with the Labour party. Our job as trade unionists is always to want more and better for working people. I think it is important to recognise that this will be the biggest upgrade to workers’ rights in decades—I was going to say in a generation, but it is more than that. It will directly benefit millions of working people.
I came in at the end of the last panel, and Mick was talking about sectoral collective bargaining. The Government have indicated that the first fair pay agreement will be in social care. We would love to see that approach—those fair pay agreements—rolled out to other sectors of the economy. That is a point that we will make going forward.
It would be churlish not to accept that the Bill is a big upgrade to workers’ rights and to union rights. This will be the first time that a Government have repealed anti-union legislation in my 35 years as a union activist, and I think it is really important that they do. If we take the minimum service levels legislation as an example, we always warned that it would be unworkable. It was red-flagged by the Regulatory Policy Committee and by the Government’s own impact assessment when it was introduced, and not a single employer has ever used the legislation. We will be positive; there will always be more that we would like any Government to do on behalf of working people, but this is a really important piece of legislation.
Maggi Ferncombe: I agree. To be frank, as the largest trade union in the country, the political stripe of the Government does not matter to us; we will obviously do what we can to improve public services and the terms and conditions and salaries of workers in those public services. You asked what more we would want, but, to be honest with you, we want an extension of what is already in the Bill: the opportunity to have some sort of legal mechanism for collective claims. Individual workers, unions when they are involved, employers and employment tribunals spend hundreds and hundreds of hours trying to deal with individual claims from individual workers. An unintended consequence would be the savings to employers from not having to deal with individual claims that take years to go through tribunals. If there was an opportunity to have a mechanism to deal with it collectively, it would save everyone time and money, including employers.
Dave Moxham: We have a disproportionate number of zero-hours contracts in Scotland, probably because we have proportionally more small businesses as part of the UK economy. We welcome the moves in the Bill to address that. I heard the evidence given by the last panel, and from our perspective the majority of employers do not use them but they have an intensive impact. For the last 10 years, the STUC has run a campaign called BetterThanZero, which goes out daily and talks to these workers, who are predominantly, but far from all, young workers. The impact on their lives—ergo the impact on the economy because of their lack of stability, certainty and security—has a far wider effect than on just the individual and cannot be overestimated. When we look at the provisions currently in the Bill, we certainly believe that what defines a short-hours contract and some of the other things that have yet to be decided need to be quite strong. If you go on to the internet, you can already see discussions among employers about how they will circumvent the proposals, so that will be one area where we will be looking for strength.
Hannah Reed: There is an awful lot to welcome in the Bill, and I will not take up the Committee’s time by listing it. We can submit evidence to you on equality rights, trade union rights and so on.
Like all Committee members, I am sure, we are keen to ensure that the Bill comes out as watertight legislation that makes a real difference to people’s rights. There are some elements of the Bill where we would want to continue working with you as a Committee and with the Government to tighten up what we consider to be potential loopholes, and I will briefly name three areas.
The first is the provisions on fire and rehire. Unite’s concerns are that some of the uses of heavy-handed tactics by employers that we saw during the pandemic and since could still be lawful under this Bill. We are concerned that employers may be able to justify fire and rehire in certain circumstances, and our view is that there needs to be a total ban. We are not confident that the employment tribunals will look behind the corporate veil or question an employer’s arguments for why they needed to use fire and rehire tactics, so we do not think it goes far enough. Importantly, there is nothing in the Bill at the present time that stops the employer from sacking the workforce. While we welcome the Government’s consultation on interim relief, we, like previous participants. would like to see some measures before that that stop the employer and require them to open their books to demonstrate to forensic accountants that changes are needed, and to provide a genuine opportunity for negotiation with trade unions. We are very equipped; we know what needs to be done if changes are needed.
Secondly, we would like to see further measures in the Bill to extend collective bargaining. Very briefly, we recognise that there are important measures on statutory recognition in the Bill, but we would like the Government to consider going further, particularly to ensure that laws prevent the abusive practices seen in the recent Amazon campaign. We would also like faster routes to recognition. Workers often have to wait for six months and are repeatedly asked, “Do you want statutory recognition?” They repeatedly say, “Yes, we want statutory recognition,” but employers are given time to fight against the workers’ will. We think there should be a faster route to automatic recognition.
The last point I would raise is on access. I have already talked about the benefits of working people having the opportunity to meet with trade unions in the workplace, to tackle discrimination and press for better pay and conditions through negotiation. We would like to ask the Government to look at the access measures, to see if there are ways of having a default or free-standing right of access so working people have a genuine right to democracy and representation at work.
Justin Madders
Q
Paul Nowak: The research was based on a very modest estimate, taken from the Government’s own suggestions that there would be improvements on things like productivity, reducing absenteeism and bringing back into the workforce people who currently find it difficult to access the workforce, for example because they have caring responsibilities or a need to balance work and family life. We assumed a 1% uptick across those measures —as I say, a very modest assessment—which meant £13 billion-worth of positive impact on the UK economy.
In many ways, this just reflects what already happens in unionised workplaces. One of the things I do as the general secretary of the TUC is to visit places up and down the country, large and small. Some of the most successful and most productive employers in this country —whether it is Airbus, Jaguar Land Rover, Rolls-Royce or, indeed, our largest private sector retailer—are employers who have close working relationships with trade unions and treat their staff with respect.
This legislation is really important, Minister, because it does what it says on the tin. It is about making work pay, and for far too many people in this country, work does not pay at the moment. We have a problem with low-paid, insecure employment, with over a million people on zero-hours contracts. Overwhelmingly, when you ask those individuals if they would like the right to guaranteed hours, poll after poll shows that 80%-plus say they would. When you play that out in practice—I know that the Work Foundation did some work with Wetherspoons. When Wetherspoons offered their staff a choice between zero hours and guaranteed hours, 99% of their staff took the guaranteed hours. That is good for those workers, but it is also good for employers, because workers who are securely employed, who feel good about their work and who are supported at work are more productive, and employers are more likely to invest in them. I genuinely believe that this legislation is win-win—it is a win for employees and workers but a win for employers as well, and it is good for the UK economy overall.
Greg Smith
Q
Jemima Olchawski: At Fawcett, we really welcome the Bill. Overall, we still have an economy and workplaces that consistently disadvantage and exclude women. That means that they are much more likely to be on zero-hours contracts, to be in low-paid work and to be held back by a lack of access to quality flexible part-time work. Each of those issues is intensified for most black and minoritised women, and for disabled women. The situation results in serious consequences for individual women. We have a gender pay gap of just under 14%. On average, women take home just over £630 a month less than men. It also has a detrimental impact on our economy, because it is a marker of the ways in which women are not fully participating or contributing to the economy at their full potential. Estimates indicate that that means we are missing out on tens of billions of pounds of GDP.
We strongly support the measures as an important step towards redressing that balance. In particular, we are pleased to see the inclusion of equalities action plans as an important way to get employers to drive forward progress on the gender pay gap. We are glad to see the emphasis on the importance of flexible working and the day one right to statutory sick pay, which will have a disproportionate beneficial impact on women, as well as further protection from sexual harassment in the workplace. Some 40% of women experience sexual harassment at some point during their career.
There are areas where we would like to see additional inclusions or things going further. Flexible working is incredibly important for women who have caring responsibilities and continue to do the majority of unpaid care, and having access to flexible work is vital to enable them to progress and earn to their full potential. We would like to see a duty on employers to advertise jobs as flexible, rather than a situation where women have to wait until they are in a job before they can begin that conversation. You cannot move into a new job if you are not sure whether you will be able to replicate the flexibility that you have in an existing role. That leads to women being under-employed and their skills underused.
The day one rights to maternity, paternity and parental leave are important, but they have to be remunerated. There has to be a day one right to pay if we actually want people to take it. Particularly if we want men to take on more caring roles, we need to make sure we have a refocus on remunerated leave, and that includes parental leave. We welcome the fact that there will be a review, but we need to think about this as part of those measures.
I would like to see more around equal pay in the Bill. Measures could be taken that would support women to access fair pay, such as pay transparency and ending salary history questions. The last thing I would like to see more on is making sure that there is proper enforcement of those rights—that the enforcement bodies are properly resourced and have the teeth to ensure that the rights really hold.
Joeli Brearley: It is a big question that you have asked. I support everything that Jemima has just said. We are very supportive of the Bill, but I think there is a lack of clarity on some of the areas that we are particularly interested in. On flexible working, we are really pleased to see that the Government want to make it the default way of working. That is really important, but we need to know exactly how, and what mechanisms will be in place to do that. The current law on flexible working isn’t working. We want to see an advertising duty as well, which I am sure we can explore in a bit more detail later.
We are also very supportive of parental leave being moved to a day one right. It is kind of amazing that that is not in place already. But without it being remunerated, take-up will be very low. We would have liked to see more on parental leave. We have a shockingly low rate of pay for maternity. We have the worst paternity benefit in Europe. This is causing huge problems for families, particularly new families that have just had a baby. They are getting themselves into terrible amounts of debt. Also the way that our parental leave system is structured means that women are responsible for the care of a baby. They tend to take long periods of time out of work, whereas men tend to go back to work very quickly. They fall into the role of breadwinner, and the woman falls into the role of caregiver, and that continues for the rest of their lives—which is why there is such a large gender pay gap.
The redundancy protections are great. Again, we are very pleased to see that, but we need specifics about what it means. We would like to see that pregnant women and new parents can only be made redundant in exceptional circumstances. By that we mean when a business is closing or perhaps when a service has stopped being delivered. It is very difficult, if you are made redundant when you are pregnant or have just had a baby, to get another job. Often you are made redundant and then cannot access statutory maternity pay. These are very particular circumstances. We know that many women are still being made redundant when they are pregnant or when they are new mums; 17% of calls we get to Pregnant Then Screwed are related to redundancy, so it is a big problem.
What we do not have at the moment, but really need, is data that shows us what is happening on the ground. A report was done by the Equality and Human Rights Commission under the coalition Government that found that 54,000 women a year are pushed out of their jobs for getting pregnant or for taking maternity leave, and 77% of new mums experience some form of discrimination. That report was done in 2016, and there was a guarantee at that point that the report would be done again five years later. It is now nine years later and we still do not have any new data to show us exactly what is happening on the ground. Without it we are making decisions in the dark, so we would really push for that report to be done again.
We would have liked to see something in the Bill on non-disclosure agreements. Our research found that 435,293 mothers had been gagged by non-disclosure agreements when experiencing some form of discrimination. It is a serious problem. Again, we do not know what is happening in companies across the country. Women tend to experience this form of discrimination and are then forced to sign these agreements and are given a low amount of compensation. They suffer mental health consequences because of that. We want to see the UK follow what Ireland has recently done, so that non-disclosure agreements cannot be enforced unless the claimant wants them to be. We would also have liked to see something in the Bill on miscarriage leave, because at the moment there is no right to any leave or pay if you miscarry before 24 weeks. We would have liked to see something on fertility treatment. As many of you will know, we have a baby crisis in the UK—we are not having enough babies. We want to encourage people to have fertility treatment, so we need a legal right to time off.
We would like to see something on reasonable adjustments. There are currently reasonable adjustments if someone has a disability, but not if they have a dependant with a disability. Many mothers of disabled children are struggling in the workplace because they need time off for appointments, or whatever it may be. We would like to see a requirement for all employers to publish parental leave policies.
Justin Madders
Q
Jemima Olchawski: There is strong evidence that the majority of sexual harassment experienced in the workplace comes from third parties. This is where someone experiences harassment from a client, customer or patient. Some of those who are most vulnerable would include those working in retail and hospitality. It is essential that anyone working in those environments is as safe as they can be and respected in their workplace. We would consider it essential that employers’ responsibility to take reasonable steps to prevent harassment includes third parties, because as a victim, it is not relevant that the person was not a direct co-employee. What matters is the harm experienced. It is absolutely within the bounds of good practice and reasonable steps for employers to address that.
Joeli Brearley: Nothing from me. It is not my area.
Greg Smith
Q
Alasdair Reisner: One of the benefits of being tail-end Charlie is that I have been able to watch some of the earlier evidence, so I was primed for this question. From an industry perspective, the first reaction is that it is a very big Bill, and that does create challenges. We have about 360,000 employers in our industry, more than half of which employ fewer than four people, so even raising awareness of the existence of the Bill is a particular challenge. In terms of how we take things forward, whatever happens during the rest of this process, a big engagement process is required to raise awareness of the outcome.
That said, generally speaking, based on the feedback that we have had, I think there is a lot of positivity about some elements of the Bill, particularly on tackling sexual harassment and looking at improving equality in the industry. I think our members would say that this is stuff that they do as custom and practice already, so it is almost raising the level of the wider industry and trying to cut out poor behaviour among not bad actors in industry, but those that are less developed.
There are a couple of points where we do have particular concerns. One is the redundancy piece. I suspect that, as MPs, you are all sick and tired of people special pleading and saying that their industry is different, but I am afraid that I am going to say that our industry is different. We deliver on a geographical basis, and when a project comes to an end, understandably, there will be cases where redundancy is the only option. To enforce upon the whole business the requirement for consultation feels like it was not the intent of this policy. It seems that we should spend some time trying to find a way through that works and results in productive outcomes. I have seen personally the impact of people being on multiple rounds of redundancy. It is miserable for the individual, and that is what I think we should seek to avoid.
The other area we have some concerns about—we have heard this a number of times today—is day one unfair dismissal claims. In construction, it takes a lot of time to get people ready to work. Coming down from two years to day one feels like a big step for an industry that, as I articulated, may not even be aware that this is coming towards them. We would want to look at how that might work. I am sure you may have questions on that, so I do not want to spend the time garbling on—I would rather give you the chance to ask questions.
Greg Smith
Q
Alasdair Reisner: It is an interesting question. There is the notification element and the consultation element. I suppose we have to ask what the policy is trying to achieve. If it were trying to avoid people almost hiding redundancies by doing them in small units, I do not think we would have any complaints about ensuring that notification was still required. It is where you are forcing people into consultation who are never going to be made redundant, yet they find themselves under the scope of that. Splitting those two things apart—so you would still have the notification, but you would not necessarily have the consultation for those who are unaffected—is something we are exploring. I do not want to say that that is the silver bullet that will solve things. We have not even discussed that collectively as an industry; we are just trying to consider what options might be on the table.
Justin Madders
Q
Alasdair Reisner: It is a cliché, but we rely on the people we work with, and they must be represented. Having good, positive relationships with the employees’ representatives is crucial. The CIJC has for decades provided us with that vehicle—I should say that it is not the largest overall; it is just the largest in the construction sector. I think back to covid, when we needed a relationship with the workforce that provided us with the independence —I have to say that Unite was brilliant at that time—to engage with the rest of the industry to say, “We’re all working collectively towards a common good.”
From discussing the Bill with members over the past few days, I know that one of the potential concerns is that it might in some way undermine existing collective agreements. I do not think that is written in the Bill; it is more in the discussion that has happened prior to the Bill. That is something we would like to protect. I am not going to pretend it is all sunshine and roses—sometimes it can be quite challenging—but I think we would want to ensure that whatever the outcome of the Bill, there is a strong, positive partnership between the employers’ representatives and the employees’ representatives.
Employment Rights Bill (First sitting)
Greg Smith ExcerptsTuesday 26th November 2024
(3 weeks, 6 days ago)
Public Bill CommitteesRead Full debate Employment Rights Bill 2024-26 View all Employment Rights Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 26 November 2024 - (26 Nov 2024)
The Chair
Thank you. I turn to Greg Smith to ask the first question on behalf of the official Opposition.
Greg Smith (Mid Buckinghamshire) (Con)
Q
Jane Gratton: Let me just say that there is a lot in the Bill that represents what good businesses are doing already, but there are five areas where we have received concerns from members. First, on trade union access and ballot thresholds, increasing access and making it easier and quicker for unions to call strike action does not mean that the union is representative of the workforce, and does not improve the relationship with employers. From our members’ point of view, it simply makes it easier to reach an end point that nobody wants. They can see nothing in the Bill to reassure businesses that the relationship will be better, so we do not think that there should be any change to union access or ballot thresholds.
Matthew Percival: Our members support the idea of thoughtfully designed and appropriately enforced employment laws—a strong floor of rights that supports fair competition in the labour market. It is not as simple as saying that employment laws are bad for business; lots of them are very good. That is why we have supported a number in the past, as well as a number of the measures in the Bill, very much as Jane said for her members.
Your question encourages me to give a quick checklist of the top issues, in the order that they come up in the Bill. There are a number of areas of concern around the regulation of zero-hours contracts, which has less to do with zero-hours contracts and more to do with the issue of guaranteed hours within contracts—it is low-hours contracts as well.
We get a number of concerns about the removal of waiting days from statutory sick pay. We get concerns around the landing of probation periods during the initial period of employment, which are more about the tribunal risk than the sorts of processes that employers might put in place. It is the cost of demonstrating compliance, rather than having a good process, that is more of a concern.
In the redundancy space, we are quite concerned about the increase in the frequency with which people will be put at risk of redundancy and the greater uncertainty for people in that environment, and that there might be an unintended kickback for workers. In the fire and rehire proposals, there is a risk that we might be making it easier to make people redundant than to change contracts, so we might go too far and not find that landing zone where it is a last resort short of redundancy.
In the industrial relations space, there are a number of concerns similar to those that Jane outlined. A big one is that there has been a lot of focus on the trigger threshold for whether a ballot for recognition should take place. Between 10% and 2% is what the Bill outlines, but the far more significant change from employers’ perspective is the removal of a requirement for a sufficient level of support in the result of the ballot. There is a risk that it could, in the extreme, become a simple majority vote in which hardly anyone votes in a large workforce but it leads to recognition.
Alex Hall-Chen: I completely agree with what has been said so far. I would add that a key fear for us is the cumulative impact of all the 28 reforms in the Bill coupled with everything else that is happening in the employment space. Taken as a whole, the measures make hiring someone riskier and more expensive for businesses. Our research shows that businesses will hire fewer people as a result.
We polled over 700 business leaders on this topic in August and 57% said that the reforms would make them less likely to hire. I would say that the situation has actually worsened since then, given recent announcements around employers’ national insurance contributions, so the cumulative impact cannot be overstated. For the first time since October 2020 our data is now showing that more business leaders expect to reduce their headcount in the coming year than increase it. The Bill is a key reason for that change.
Greg Smith
Q
Matthew Percival: It is very difficult to put a number to it, because there are so many unanswered questions in areas where details are intended to be put into the Bill at a later stage. That leads to a wide range of potential estimates about the impact of a number of the measures. Work we are doing at the moment will give us updated figures on sentiment around a number of measures. We are looking to publish that soon, and I will make sure that we include those numbers in our written evidence.
Jane Gratton: The feedback we have had from members has been concern about increased cost, complexity and lack of flexibility to manage the workforce in the way that a business needs to. Members say that there would be a reduced hiring appetite were this legislation to come in, and that they would be less likely to recruit new employees due to the risk and difficulty, particularly under the day one rights, unless there were at least a nine-month probation period with a light-touch approach. There would be a preference for contractors and temporary staff, again to reduce the risk and avoid legal complications. To give some figures, 38% said that there would be a hiring freeze, 25% said that the Bill would result in less pay, and 30% spoke of less investment in their business. There would be significant risks and costs, particularly to small and medium-sized enterprises.
Alex Hall-Chen: In addition to considering recruitment levels at the higher level, we are also getting feedback about types of recruitment and the impact that the policies will have on that. We have had a lot of feedback, particularly with respect to day one protection against unfair dismissal, that essentially boils down to the fact that, under the current system, employers are very likely to take a risk on hiring a borderline candidate who may not have quite the right experience or qualifications, but they will now be much less likely to take that risk because the cost of getting it wrong will be considerably higher. I think there are really important questions about what that means for people on the fringes of the labour market, especially as those are precisely the people the Government need to get back into work to meet their 80% employment rate target.
Justin Madders
Q
On a more general point, Jane in particular said that a lot of the businesses you represent do a lot of the things in the Bill already. Do you think it is important that we have a level playing field so that good businesses are encouraged to treat their staff properly?
Jane Gratton: Yes. There has been a cautious welcome for some of the measures in the Bill—lots of businesses agree with the sentiment that it is about fair pay, security and non-discriminatory workplaces—but the question is around the proportionality of the changes that are being introduced in relation to the problem that the Government think needs to be addressed. From a business point of view, it is about the additional complexity and, in respect of some of the detail of the measures, the restrictions that the Bill will impose.
For example, on changing the “one establishment” rule, the feedback from members has been, “For every change, will we have to consult all our employees across all of our businesses, even if they are doing completely different things at different ends of the country, with different levels of skill and job role? It is disruptive for the business and unsettling for every employee.” It is about the detail. In principle we all want these things, but the detail of some of the measures and the impact they are likely to have is causing a lot of concern.
Matthew Percival: You are right to say there is a live consultation on a number of measures, and the consultations on a number of things are promised to come but have not started yet. That is why I resisted putting a figure on what it would currently cost, because there is a wide variance in what that could end up being. We are committed to trying to find a landing zone for the Bill that means that the Government can deliver their ambitions, which include the Bill not having a negative impact on the ambitions around growth or the focus today, outside this room, on the “Get Britain Working” agenda and an 80% employment rate. We want to stitch all those things together and find that landing zone.
It is a credit to you and to colleagues that the engagement we have had up until now has led to things like some movement on the recognition of the importance of a probation period. There is so much in the Bill and we have only really scratched the surface in terms of what we have been able to get into the detail of so far. We are hoping that through this process, and as the Bill progresses through Parliament, we are able to give the same amount of attention to the rest of the Bill.
The Chair
We will now hear oral evidence from David Hale, head of public affairs at the Federation of Small Businesses, and Dom Hallas, executive director of Startup Coalition UK.
We must stick to the timings in the programme order that the Committee has agreed. For this session, we have until 10.40 am. Would the witnesses briefly introduce themselves for the record?
David Hale: I am David Hale, from the Federation of Small Businesses.
Dom Hallas: I am Dom Hallas, executive director of the Startup Coalition, which is a lobby group for tech start-ups and scale-ups in the UK.
Greg Smith
Q
David Hale: The impact assessment was quite clear that the bill would be more than £5 billion a year. For example, it did not include any of the consequential impacts on businesses from the changes to unfair dismissal. It merely counted the ability of the Government to change. Changes to unfair dismissal are one of the things that businesses flagged, so £5 billion is very much at the low end of that estimate. You may well have seen the Regulatory Policy Committee say yesterday that the impact assessment as a whole is not fit for purpose.
The only question about the £5 billion, or the £5 billion-plus, is where that cost is borne. Obviously, businesses can bear the cost. People who are not in work can bear the cost, or people who are in work can bear the cost through wages or through lower hours. The £5 billion is a very low estimate, but where that cost falls is the more complex question.
Dom Hallas: The starting point from our perspective is that tech start-ups and scale-ups are unusual businesses—unusual small businesses, frankly. They scale rapidly—they can be growing at 50% or 100% a year. They pay unusually well—disproportionately well. The average salary is in the range of £50,000 to £60,000. They change really fast, because they are scaling and doing things really quickly. They treat staff like royalty—they treat them incredibly well—because it is a highly competitive labour market for technology talent, and they need to be able to hire in it.
That means they really value flexibility. I cannot speak to the £5 billion figure, and the reports out today throw some scepticism on that. What I will not do is sit here today and tell you that this piece of legislation would be disastrous for our ecosystem—clearly not—but what it would do is present a series of speed bumps, a series of bumps in the road, for these kinds of businesses, the cumulative effect of which is to chip away at some of the flexibility that our companies prize.
Greg Smith
Q
Do you think the lack of flexibility, or making the rules more rigid, as this Bill does, and some of the factors that previous witnesses talked about—dissuading people to take on new hires and making the risk of new hires that much greater—will dissuade more people from choosing to leave payroll and start up on their own, whether through self-employment or registering a business?
Dom Hallas: I leave self-employment to one side, but from the perspective of an entrepreneur trying to build one of our tech businesses, the truth is that any number of things the Government may or not do in policy are not necessarily what persuades or dissuades someone from starting a business. The reality is that they are probably going to do it anyway. The question is, are we going to make it harder or easier for them? In truth, what we consistently see—and I think this is where you have the conversations around taxation and the Budget layered on top—is the risk of a number of pebbles in the stream for entrepreneurs that will not prevent them from trying to build their business, because they will crack on and try to do it. One of the things we consistently talk to entrepreneurs about when we ask them about policy is, “What are the challenges you face?” The answer they give far too frequently is, “There are loads of things, but we just have to get on with it.”
I put to the Committee that the question is ultimately how we prevent our policy environment from being seen as a barrier to overcome by the entrepreneur community and the founders who are building these kinds of businesses and creating these kinds of jobs. How do we create a situation that is as open and flexible as possible for them to operate and, therefore, a competitive jobs market that will ensure that the workers are treated really well?
Greg Smith
Mr Hale, do you have a view on that perspective?
David Hale: If the Government had a good process for the Bill, which I do not think they do, we would be exploring what the participation harm is. Part of that is not just whether firms choose to recruit, but who they choose to recruit. On the whether, from a small-business perspective, you might get a contract, you might choose to scale to meet it, or you might not. It is not the case that all small businesses will choose to scale regardless. There is a risk there, and if you increase risk, you lessen the chance that somebody will do that. Part of the importance of participation harm is not just whether, but which people are employed.
We know we have a CV culture in this country. We know that managers at all levels—I am talking not only small employers, but managers in small and large businesses—look down CVs and look for gaps. If people find gaps in CVs, we know that in the UK, they are less likely to feel that that is a risk they can bear. If you add risk to employment, part of the problem is not just whether they take that risk, but who they take that risk with.
Small businesses are currently most likely to take that risk. Small businesses currently recruit most from outside the labour market. If they do not do that—and we know that small businesses are responsive to risk—it is not just small businesses that lose out, but the businesses that in turn recruit from them. Larger businesses might well be more likely to recruit someone who has two years at a small business on their CV or experience doing bar work when they were a student, and they might benefit from the introduction to work they have had. But the whether and who is currently missing from the conversation, and I think that is because we have had such a quick process. That is the main thing. Does the Bill help somebody take that leap? The Government should be making that case. I have not seen a case for how the Bill would help somebody want to recruit more.
Greg Smith
Q
David Hale: There seems to be a big question about whether the Bill should be split up. It is a very large Bill. Overwhelm is the primary response. The second response is, to put it politely, bemusement about what the Government are trying to achieve and how these measures are intended to achieve it. We know the very high level, but the high level does not match the measures. If you are talking about security at work, the Bill does not appear to give extra security at work. There is bemusement about that.
Like most of us, small businesses are scared of getting sued, so there is fear about that. The Bill increases the risk of litigation against small businesses. The next question is about the possible harms of the response to that fear, which are things like the participation harm, harm to the work environment, and harm to individuals and the whole economy from the knock-on effects. I am not sure whether there are 28 or 70 measures—maybe some of you could list them all, but I do not think anyone else could. I do not think a small business would be able to tell you what they are or implement them all at once, so there is a question about whether the Bill should be split up.
Dom Hallas: I agree on the scale point. The Bill has a big impact. The top practical concern from a start-up ecosystem perspective is day one rights and exactly what that means. Obviously, there is an open discussion about the probationary period and exactly how that is going to work. From a start-up ecosystem perspective, the core point is ultimately that you have fast-moving businesses whose needs change, and the experiences of employees change.
The practical impact of the Bill in that area will be that people are less likely to continue to take a risk on someone, even when they have hired them after a probation period, because of the changes the Government are looking at. What we will get is a situation where employees who might be doing well, but not as well as you might hope, are more likely to see their employment terminated at that stage, as opposed to over a longer timeframe, with the business saying, “Well, we can’t take the risk.” So there seems to be a perverse incentive that ends up being created.
The Chair
We will now hear oral evidence from Ben Willmott, head of public policy for the Chartered Institute of Personnel and Development; Cathryn Moses-Stone, head of policy at the Chartered Management Institute; and Carly Cannings, founder of The Happy Business School. Once again, we must stick to the timings on the programme motion, so this session will have to end at 11.25 am. Will the witnesses briefly introduce themselves for the record?
Ben Willmott: I am Ben Willmott, and I am head of public policy at the CIPD, which is the professional institute for human resources and people development in the UK. We have 160,000 members, who are mainly HR directors, HR managers and HR advisers working as practitioners in organisations across all sizes and sectors of business. We also have about 15,000 self-employed HR consultants among our membership, who work with tens of thousands of small firms to help build their HR and people management capability.
Cathryn Moses-Stone: My name is Cathryn Moses-Stone, and I am head of policy at the Chartered Management Institute. We are the leading professional body dedicated to raising the standards of management and leadership excellence across the UK. We have more than 220,000 members, and more than 150,000 people are currently studying on one of our management and leadership programmes. Our royal charter defines our charitable mission as increasing the number and standard of professionally qualified managers across the UK.
Carly Cannings: I am Carly Cannings, founder of The Happy Business School. I am a workplace culture consultant, and I help organisations to create happy, thriving, people-centric cultures.
Greg Smith
Q
Ben Willmott: There is no doubt that the cumulative impact of the proposed regulatory changes will be significant. Our members are responsible for making changes to employment contracts and workplace policies to ensure they align with any changes in employment legislation. They communicate any changes to staff and, crucially, ensure that managers have information, advice and, where necessary, training so that they meet any new legal obligations in the workplace.
Of course, we know that there will be a likely increase in the number of tribunal applications, which our members will have to respond to. That has not just potential compensation costs; there are HR and management costs to responding to tribunal claims, even those that do not actually make it to tribunal in the end and those that do not have any merit. Without a doubt, there will be a significant impact on workload.
The other point I want to make is that the time resources spent on those activities mean that employers will not have the time to invest in addressing the skills gap, upskilling staff and supporting technology adoption. That is the other challenge, which may undermine the other productive activities that you want HR and people management specialists to engage in.
So, yes, phasing these measures and really thinking about how they will be implementable is really important.
Cathryn Moses-Stone: Echoing Ben’s last point, which moves the discussion on quite nicely, we know that broadly there is quite strong support for the Bill among British managers. We have polled our managers over the past year and the last month, and in the last month over 75% were supportive of improved workers’ rights as a means to boosting productivity and 65% felt that it should be a top national priority. But obviously these are just changes. We know that they are meant to be the catalyst for implementing better working practices and more improved working cultures; the extent to which they can do that will very much depend on the implementation, which depends on the time and the process that we give to the managers who have to deliver it day to day, on the ground, to get it right.
Our data shows that over 82% of people are accidental managers, which means they go into a management position without any formal management training. If you are expecting them to deliver a whole suite of really complicated reforms, we need to ensure that the consultation period is long enough and that they are consulted in the right ways. Also, things like the fair work agency really have to take into consideration what the legislation means for allowing managers and leaders to upskill to deliver things in the right way, and the agency should not assume ill intent as a first port of call but work with people to understand what it might look like for them in practice, when they deliver it in their organisations.
Carly Cannings: I would probably echo the comments of the other panel members. It is not necessarily a case of splitting the Bill up; it is about giving enough time, and enough time with the detail. On reading the Bill initially, it is quite obvious that there are intentionally large gaps, because they are to be filled by secondary legislation for the most part. It is a case of ensuring that employers have enough time to get used to the changes introduced by the broad brush of the Bill, which should then be followed up with further consultation and enough notice on those changes.
Greg Smith
Q
Ben Willmott: We understand that the changes to the unfair dismissal regime in any new initial or statutory probation period will not come in until autumn 2026 at the earliest—that is the sort of timeframe you need to be thinking about. The other thing is that, because of all the other measures, it would help if you could push that out, as that is possibly the most substantive change that will affect all workplaces. If you could phase in some of the other changes over a longer period of time—say three years in total—that would certainly help.
The other point I have been echoing is that ACAS absolutely needs more resources to support the implementation process. We have called for ACAS’s budget to be doubled to £120 million a year. It is really crucial to support compliance, particularly among those small and medium-sized businesses that we know are more likely to fall foul through accidental non-compliance. They are less likely to know what their employment regulation obligations are and have less resources to adapt to the changes.
Cathryn Moses-Stone: Similarly, we would like to see consultation throughout the whole of 2025, which would be a really nice long period to try to understand exactly what the legislation means for managers. When we are looking at training courses and development for managers and leaders, that does not happen overnight. If there is an understanding that there will be a management gap in some particular area of the Bill, you then have adequate time to try to find the ways to support the people delivering it to upskill, so that they can do it in the right way. Although we cannot give specifics, I think 2026 echoes a decent period of time with implementation.
Greg Smith
Q
Cathryn Moses-Stone: I cannot talk to the specifics of the Bill’s initial cost implications, but I can talk to the cost implications of having really highly trained managers in the workplace. When thinking about general management training, we know that chartered managers, on average, boost a business’s revenue by £59,000. We know that the average pay rise of a chartered manager is £13,000. We see in a lot of our data that there is a direct productivity impact on an organisation from having highly skilled, highly trained managers who are able to implement policies that increase retention, retain talent, boost morale and create a more positive workplace culture, which prevents turnover, which saves a business from losing money.
It probably also comes back to the point that managers need time to get it right and to understand it, so that the burden on their business in the long run is not huge because they have the right amount of time to understand how they will work with their employees so that they do not have to escalate everything to tribunal. The early training period is crucial for the wider cost savings, because we know that there are lots of concerns from businesses on these issues, as well as the broader sentiment of being in support of the Bill.
Ben Willmott: One of the challenges for a business looking to upskill its managers is that that will incur a cost. If we look at the proposed increases in employment costs overall, we see those from the different measures in the Bill and those from the changes in the Budget, which also need to be taken into account. Businesses will have to find the money to upskill and train their managers. That is one reason why we are saying that ACAS needs to be resourced, particularly to help those smaller businesses that are more resource-challenged and have less knowledge and capability around the HR and people-management side of the business, which is so important to this.
Carly Cannings: Ben made a really important point about making sure that small businesses are adequately resourced to deal with the changes. I am, as many employers are—as the statistics bear out—very supportive of raising the standards of employment, and the Bill certainly takes a step in the right direction towards raising standards. The balance that needs to be struck is about making sure that employers, and particularly small employers, are able to cope with the changes.
There are lots of businesses out there already doing really good things, and some of the things in the Bill will be measures, practices and policies that lots of employers already have in place. That is not the case for everyone and, in particular, that might not be the case for small businesses. Echoing Ben’s point, small businesses are more likely to fall foul of the legislation accidentally, rather than intentionally, because they do not have the right access to support and advice in the same way. That is an important point that must not be missed.
Cathryn Moses-Stone: Would it be all right if I added a point? It is true, obviously, that there is a cost to training managers, but that is why we are also really concerned about the proposed defunding of the level 7 apprenticeships, because there will be a huge knock-on impact. Potentially, a huge skills gap could open up in highly trained management across the UK, at a time when businesses are going to be required to know their staff and to implement the legislation in the right way. We are concerned about how that aligns with the development and delivery of the Bill.
Justin Madders
Q
I have a more general question about what you see as the current weaknesses in the employment rights sphere. What do we need to do to give people more protection and security at work? Do you think the Bill addresses that?
Ben Willmott: The introduction of the fair work agency—a single enforcement body—is a positive step forward, but there needs to be further thought about how to improve the labour market enforcement system. We need a long-term strategy to improve labour market enforcement that includes not just a fair work agency but the Equality and Human Rights Commission and the Health and Safety Executive, not in a single enforcement body but as part of the strategy. We need measures to improve the efficiency of the employment tribunal system, which we know is swamped, and we need to increase the overall number of labour market inspectors—by international standards the UK is under-resourced on the number of inspectors.
As I have said before, we also need to significantly increase ACAS’s budget so that it can help small firms to comply. If labour market enforcement is about getting the carrot and stick balance right, that is why it is so crucial that ACAS can play that role in helping to raise employment standards. Businesses that are not bad employers—those that are poorly resourced, or might be knowledge-poor or time-poor, particularly micro and small firms—tend to fall foul of legislation because of those issues, not because of any malicious intent.
Cathryn Moses-Stone: I will start with the latter part of the question. We have a lot of data showing the impact of good management practice on both productivity and an improved workplace culture. Much of the Bill falls into that camp. For example, we know that one third of employees have cited negative work culture as a driver for leaving their organisation. That is obviously driven by ineffective management. We know that when managers in organisations have mutual trust and respect with their direct reports, they find that productivity rises. Poorly managed teams have lower motivation, satisfaction and retention. We believe a lot of the elements of the Bill are tied up in driving much of that in a positive way.
The things we are worried about, which echo what I have said before and what Ben has said, come down to implementation—that is, what the fair work agency looks like, how it behaves, how it supports, and how it gives space for managers to upskill. We know that 40% of our managers have expressed some concern about the detail of some of the policy, such as the right to disconnect. For example, what defines business-critical comms, versus just maintaining team comms?
We know that with high-quality management training—helping people to understand how to have difficult conversations, prioritise and have emotional intelligence—people can navigate those things much more effectively in the workplace. Our worry is about what the implementation will look like and about how managers and leaders will be supported in respect of the fair work agency.
Carly Cannings: I think the Bill is about raising minimum standards. As I said previously, a lot of employers are doing a lot of good things. Let us be realistic about the impact of the Bill: it is about raising minimum standards. Cathryn alluded to the bigger picture of creating happy, thriving workplace cultures, and it goes far further than that. This is not a call for further legislation; for me, legislation is about raising minimum standards. There is so much more outside and beyond legislation that makes a real difference to whether somebody has a happy, thriving workplace culture, and the benefits of that culture.
Thank you, Cathryn. You have done a very good job of outlining the things that I see in reality and when working with my clients—the factors that play a part in creating a workplace culture. Like I said, for me the Bill is about raising minimum standards.
Draft Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024
Greg Smith Excerpts(1 month ago)
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Greg Smith (Mid Buckinghamshire) (Con)
It is a pleasure to serve under your chairmanship, Mr Mundell.
As the Minister said, this draft statutory instrument was largely consulted on and prepared by the previous Conservative Government, so clearly the Opposition will not divide the Committee this afternoon. I congratulate the Department for Business and Trade, however, on managing to update the explanatory memorandum, unlike a Department for Transport statutory instrument that I responded to the other week, which still listed Guy Opperman, a Minister in the previous Government, as having signed off the declaration.
The measures in the draft Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024 build on legislation passed under the previous Government. The memorandum that accompanies this statutory instrument directly references historical concerns about fire and rehire tactics, which—I put it to the Committee—the last Conservative Government addressed through the establishment of a statutory code of practice. I gently suggest to the Minister that that should be reflected in the Bill that comes to Committee next week.
In government, we were clear with employers that they must not use threats of dismissal to pressurise employees into accepting new terms, and that they should have honest and open-minded discussions with their employees and representatives. In accordance with the code of practice, businesses must consult with employees in a fair and transparent way when proposing changes to their employment terms.
The Conservatives took the initiative to uphold and secure employment rights. Meanwhile, the Government—this is where some contention sneaks in—seem content with their disastrous national insurance jobs tax on employers and employees, the latter shouldering 76% of the cost according to the Office for Budget Responsibility, and to see businesses struggle and in many cases risk failure all together. There cannot be employee protections without employees in the first place.
Oral Answers to Questions
Greg Smith Excerpts(1 month, 3 weeks ago)
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Sarah Jones
The right hon. Gentleman makes a really good point, and I would be happy to have a proper conversation with him about it. Marine renewables are a huge opportunity for us. We can build the supply chains across the country and, of course, Scotland is uniquely placed to take advantage of that. I would love to have a conversation about it.
Greg Smith (Mid Buckinghamshire) (Con)
When it comes to an industrial strategy, in the Labour Government’s first few months they have effectively shut down UK virgin steelmaking capacity, with no commitments to primary steel in yesterday’s Budget of broken promises. Unlike the United States and the European Union, the Government have failed to protect our car manufacturers against Chinese state aid. They have massively increased the costs to the very drivers of industry—real businesses—of employing people. Should the Government not call it their deindustrialisation strategy?
Sarah Jones
The challenge we have is that we have inherited the worst living standards growth during a Parliament in modern history. We have inherited huge challenges that we have to overcome, but we are looking to the long-term with our industrial strategy—[Interruption.]
Sarah Jones
I do not know whether the hon. Member for Mid Buckinghamshire (Greg Smith) has been paying attention, but we are developing a steel strategy, which the previous Government failed to do, with £2.5 billion of funding. We put a boost of £2 billion into our car industry only yesterday in the Budget, alongside £1 billion for the automotive sector and money for life sciences. We are developing an industrial strategy for the long term for the first time and we will not follow the Conservative party, which let our industries suffer and get to the crisis point that we are now having to deal with.
Greg Smith
The Minister mentions the car industry. Yesterday, after the Budget of broken promises, talking about the industrial strategy, Mike Hawes of the Society of Motor Manufacturers and Traders said:
“Delivering that strategy depends on the UK being globally competitive. Additional National Insurance Contributions will put massive pressure on the automotive supply chain which is predominantly SMEs.”
He described the lack of substantive measures to support the new car market as “hugely disappointing”, concluding that,
“the cost will soon be felt in reduced UK investment, economic growth and jobs.”
With such dire warnings so early on, is this not more evidence that Labour just does not get business and that its industrial strategy is in tatters before it has even begun?
Sarah Jones
For a Government who do not get business, it is surprising, is it not, that we got £63 billion of investment through the international investment summit—twice what the previous Government managed after two years of planning it? The Government are working very closely with the automotive industry. We know that the global situation is very difficult and I talk to Mike Hawes very often, which is why we put £2 billion of funding into the Budget yesterday. It is also why we are working very closely with the sector to create the conditions we need to transition to electric vehicles and to protect our industry in a way that the previous Government, frankly, failed to do.
Steel Industry
Greg Smith Excerpts(2 months, 1 week ago)
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Greg Smith (Mid Buckinghamshire) (Con)
It is a pleasure to serve under your chairmanship, Mrs Harris.
I thank and congratulate the hon. Member for Boston and Skegness (Richard Tice) for securing this debate in Westminster Hall this morning. I also thank everyone who has contributed to it, particularly the hon. Member for East Londonderry (Mr Campbell), whose intervention will potentially go down in history as one of the most innovative ways to participate in a debate on steel, and my hon. Friend the Member for Brigg and Immingham (Martin Vickers) for his superb contribution.
Just a few weeks ago, I challenged the Minister in the main Chamber on the Government’s approach, not just to Port Talbot but to the UK’s entire steel industry, yet just a couple of weeks later we are on the cusp of Scunthorpe steelworks potentially closing completely by Christmas, despite the owner’s clear ask to the Government to safeguard what amounts to thousands of jobs and a vital component of our economic security. If we let Scunthorpe close, on top of Port Talbot, we risk becoming dependent on cheap imports, particularly from China.
Although I understand that the Chancellor and the Prime Minister have had some issues understanding their own manifesto commitments of late, surely the Government cannot possibly have dropped their clear commitment to steel in their manifesto. Surely not, given that 90% of Network Rail steel is sourced from Scunthorpe, and that Liberty and British Steel support more than 3,500 highly-skilled jobs there—those people are dependent on the commitment that the now party of government made in their manifesto. I understand that the Government’s talks with the owners have already stalled and broken down—not the best start for the Secretary of State and the Minister. I remind hon. Members that, less than a year ago, when in opposition, the Secretary of State said that the drive for green steel must mean more jobs, not fewer, but the reality on the ground today is fewer jobs in steel in our country.
The Minister knows that Scunthorpe is now the only site in the UK with the ability to produce virgin steel. If she allows it to close on her watch, we will be left open and vulnerable to cheap imports from China, and that must not be allowed to happen. Equally, I understand that the Government are not prepared to support virgin steel manufacturing while new electric arc furnaces are being commissioned and are coming online. Is that correct? If so, how does it chime with the Secretary of State’s previous commitment that decarbonisation must not mean deindustrialisation?
With the import of coking coal due to end this month, and the possible closure of the Scunthorpe plant completely by Christmas, resulting in thousands of job losses, time is running out. The Government simply must get a grip of the situation. The loss of that vital industrial and economic asset will result in 5,000 job losses across the supply chain and the end to steel production for the first time since the start of the industrial revolution.
Given the choice in front of them, the Government must take responsibility not just for Scunthorpe but for the downstream impact on our shipbuilding industry, the defence sector and, as the hon. Member for Boston and Skegness said eloquently, the production of the wind turbines that, on the other hand, the Government are encouraging—in fact, one of their first acts was to end the ban on onshore wind. They cannot have it both ways: if they want to have their cake and eat it, they need to support the steel sector. The Government have already let Harland & Wolff down. Will they do the same with the whole of the steel sector?
The Government’s plan seems to be to divert imports of steel from China through Brazil to give the impression that this is somehow an innovative solution. I am afraid there is nothing innovative about this Labour Government’s approach. They are masking their failure to secure a future for our steelworkers and our economy as a whole, and at the same time they are risking our national security in the face of growing threats from, among others, China.
Jessica Morden
The shadow Minister talked about taking responsibility, but will he take responsibility for the fact that for 14 years we had no industrial strategy, no steel strategy and endless steel Ministers? Labour Members begged to have any kind of strategy for steel. Therefore, the situation that this Government inherited just a few months ago is the responsibility of the previous Government.
Greg Smith
I am grateful to the hon. Lady for her intervention, but as my hon. Friend the Member for Brigg and Immingham set out, the last Conservative Government took many concrete steps to support our steel sector. I gently remind Members on the Government side—there is no sugarcoating this for Members on my side—they won the election. They are responsible now and have to take decisions for the future of steel; it is no good constantly coming back and trying to do the political point scoring that we have seen time and again in the Chamber. The other side is in charge now, so they can make the decisions. If this Minister wants to stand at the Dispatch Box in a few moments and make those commitments to virgin steel, to steel production in this country, to Scunthorpe and Port Talbot, that will be welcomed by both sides of the House, because both sides of the House want the future of steel to be secured in this country.
What we are seeing on the ground right now is something different, however, because we have returned to the Labour party playbook: scrap jobs, scrap production and become reliant on higher-polluting countries for imports. That is not what I call decarbonisation, so I ask the Minister to come clean. What has gone wrong so early in this Government’s tenure? Why are she and the Secretary of State unable to fulfil their manifesto commitments? Can the Minister explain what will happen to those thousands of jobs in the steel sector across our country? We need the steel strategy now, not a promise of it for the future. Time is running out.
Sarah Jones
I thank the hon. Gentleman for his intervention and for reading out a message from somebody watching the debate. We all agree that it is time for action and that is exactly what the Government seek.
I will expand on our plans. The steel strategy will be developed and delivered in partnership with the steel sector and the trade unions, of course. It will work in lockstep with the Government’s industrial strategy. Our intention is to increase our UK capabilities, so that we can create a more vibrant, competitive steel sector. That will turn around the situation we inherited, where— I want to emphasise this—under-investment had resulted in dated infrastructure.
My hon. Friend the Member for Stockton North (Chris McDonald), who knows so much about the steel industry, made the point about the efficiency and economy of the new technologies, and why blast furnaces have struggled to make money for the businesses that own them in this country. British Steel’s blast furnaces were built in 1938 and 1954. Both the blast furnaces at Port Talbot were built in the 1950s. They have become incredibly unproductive because they have not been invested in. The new technologies are simply more productive. If we do not keep up with what the rest of the world is doing, we simply will not be able to compete in the market.
We inherited an industry on the brink. Nevertheless, within 10 weeks of coming into Government, we negotiated a better deal with Tata with better safeguards for workers and more money invested in their future. Our £2.5-billion fund for steel will ensure that we have a steel industry for the future. The Government’s ambition is to ramp up investment, strengthen our supply chains and create more well-paid jobs in the places they are needed.
We talk of primary steel. With the help of experts, we will review the viability of technologies for the production of primary steel, including direct reduced iron.
Greg Smith
The Minister just said that she will review the options. I hope this is a binary yes/no question: is there a ministerial direction in the upcoming steel strategy to include a commitment to virgin steel production in the United Kingdom?
Sarah Jones
I think I was fairly clear. We have been in opposition. We want to produce primary steel in this country; the previous Government got us to a point where that is almost impossible without huge investment. We are supplying £2.5 billion of investment and looking, quite rightly, at the best way to spend that to create a viable steel future for this country. We are looking at direct reduced iron as part of our steel strategy, which the previous Government did not do.
The UK’s ambition is to ramp up investment. Many hon. Members talked of the need to procure British steel in this country, and we are now in a situation where 95% of the steel procured by the UK Government for infrastructure is British, if the necessary type of steel is made in the UK. The issue is that we do not produce all the different and right types of steel, so we need to ensure that we use the Procurement Act 2023 as much as we can to drive economic growth in steel.
I disagree with the hon. Member for Boston and Skegness on whether the green agenda can drive up jobs—we think that it can. For example, the Korean company SeAH is building a factory in Teesside that will build monopiles, which are the big structures that go into the ocean and anchor wind turbines. It is currently building that structure with 30,000 tonnes of steel from British Steel. We want to get to a point where we are not only building those kinds of factories in this country but using British steel where we can to make the infrastructure.
At the moment, we do not have a factory that makes turbines on the scale that we need for floating offshore wind, but SeAH is building that factory because it has an agreement with RWE, which will be running the turbines that it builds in future. That green job development into wind and renewable energy is driving our ability to build a factory in Teesside to create hundreds of jobs to build those monopiles, and we are using British steel. That is the kind of future that we want to see through the steel strategy; we are looking at those opportunities to bring new steel companies into this country and to find ways to drive up production in this country.
I should address the issues holding us back, as they were mentioned in the debate. China and excess capacity is a huge issue that we should not underplay. China is now the biggest steel producer in the world and its unfair subsidies have led to massive steel over-production, which fuels global overcapacity and drives down prices. That is a global issue with local consequences that makes profitable steel production here in the UK much harder. That key global situation is helping to shape our future steel strategy and we will need to tackle that problem through things like the carbon border adjustment mechanism—CBAM—and ensure that we are working with a level playing field.
Energy prices were mentioned by many Members, and for too long British energy-intensive industries, including the steel sector, have been held back by high electricity costs. Again, I disagree with the hon. Member for Boston and Skegness: electricity prices are set by global gas prices and the problem is our dependence on fossil fuels, as well as the fact that we did not mitigate for that situation in this country at all. When all the prices shot up with the war in Ukraine, we were in a worse position than many countries around the world.
The British industry supercharger that the previous Government developed, which the hon. Member for Brigg and Immingham (Martin Vickers) mentioned, will bring down electricity costs for the UK’s most energy intensive industries, but we know that we need to go further. It brings down only 60% of costs and there is still a disparity. We believe that, in an unstable world, cheap home-grown green energy is the future. That is what will drive down prices, reduce our exposure to the volatile fossil fuel market, protect bill payers and strengthen our energy independence. Fundamentally, that is what will bring down costs in the long term.
Members also mentioned the challenges of decarbonisation. Tata and British Steel’s plans to invest in electric arc furnaces are driven by market conditions and the desire to reduce their carbon footprint—customers want greener steel. The UK is going to have a CBAM. If we were producing steel in the UK with blast furnaces, we would be massively inhibited because the EU is bringing in a CBAM, so the cost of exporting to the EU would be much higher. We have to deal with the world as we find it, which again is where we disagree with the hon. Member for Boston and Skegness. We cannot look back and try to re-create the past; we have to deal with the world as we find it, which means that we have to move towards those more efficient and greener energies.
The EU, where 78% of our steel exports went in 2023—that is worth pointing out—will bring in its carbon border adjustment mechanism in 2027. We rely on exporting a lot of the steel we produce to the EU, and we would be at a massive disadvantage were we to carry on producing steel from blast furnaces. We have committed to a UK carbon border adjustment mechanism, which will give UK businesses the confidence that, when they invest in decarbonisation and electrification, they will not be at a disadvantage. That is important.
On other issues mentioned by hon. Members, I should touch on Scunthorpe, because that is at the forefront of everyone’s mind. No one wants to see any job losses, and everyone wants to see the steel industry thrive. Through our strategy, that is what we want to do. For commercially confidential reasons, which I am sure hon. Members understand, I cannot talk about our conversations with the owners, but I reassure Members that we are having conversations all the time and that we are working unbelievably hard to get a solution for Scunthorpe and to give the certainty that the hon. Member for Brigg and Immingham talked about. I completely understand the issue with the instability of the current situation, but all I can say to him is that we are doing all we can to work with the company on what the future will be.
Port Talbot Transition Project
Greg Smith Excerpts(3 months, 1 week ago)
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Greg Smith (Mid Buckinghamshire) (Con)
I thank the Secretary of State for giving me advance sight of his statement. I wish I could say that I am surprised by any of its content, but the media and the press have, of course, been relentlessly briefed on it over the last couple of days.
It is also no surprise that, once again, Labour is presiding over the demise of our steel sector. Output fell by 47% under the last Labour Government, and 56% of jobs were lost. Today’s deal means that 100% of output will go at Port Talbot. An electric arc furnace will take five years at best to get up and running; some suggest that it will be eight to nine years before a single new job is created, if we see any new jobs at all. As the statement says, this is a transition, but it is a heartbreaking transition for thousands of people—a transition from being in work to being out of work. In his discussions with Tata, why did the Secretary of State not take steps to ensure that the blast furnace will not be closed before the new electric arc furnace opens? Is this not the New Labour playbook—scrap jobs, scrap production and become reliant on higher-polluting countries for imports? That is not what I call decarbonisation. I must say, I feel a little sorry for the Secretary of State, who has been dispatched here to announce these spending decisions just a day after Labour’s day of shame on winter fuel cuts for pensioners.
In government, the Conservatives provided a grant of £500 million towards the £1.25 billion invested by Tata Steel, one of the largest support packages in the government’s history. At the time of the last Government’s announcement, that support was expected to save at least 5,000 jobs in the company. We worked with the Welsh Government and Tata Steel to establish a dedicated transition board to support affected employees and the local economy, backed by £100 million in total. Will the Secretary of State provide an update on any of those job projections?
Today’s announcement is notable for the absence of any reassurance or plans for the thousands of steelworkers in Scunthorpe who may not have jobs by Christmas. Equally notable is the Government’s failure, once again, to provide any detail on the domestic production of virgin steel. The Secretary of State says that we will have a steel strategy in the spring, but thousands of jobs, along with production capacity, have been scrapped today.
It was no surprise that last week, during the urgent question on steel, four times, the Minister for Industry failed to commit to safeguarding the future of virgin steel production in this country. I am sure that the Secretary of State does not need reminding that if he allows the Scunthorpe works to close, too, we will be the only G7 country unable to produce virgin steel. That leaves us open and vulnerable to cheap foreign imports, particularly from China. To his credit, he has always argued against offshoring our steel industry. He conceded once that it would be a “fundamental political mistake”. What conversations has he had with the Secretaries of State for Transport and for Defence about the impact of the Government’s new steel policy on our national security and ability to deliver infrastructure? Will he assure the House that he is doing everything in his power to ensure that we do not lose virgin steel manufacturing in the United Kingdom?
For the benefit of new colleagues, the Government, when in opposition, were committed to £28 billion a year of borrowing to fund their decarbonisation plans—a price tag that has magically disappeared, although the target has not. The Secretary of State made promises about that to the steel industry, but where are those promises now? Where is that money? Is he still battling the Chancellor? We know that Labour’s unions are quite successful in squeezing money from the Treasury, so maybe he can send them to stand up to the Chancellor if he is having problems.
The Government have our support in ensuring that the future of steelmaking in this country is sustainable. That goes beyond Tata and South Wales. Only in Labour’s world can the word “improved” mean fewer jobs and higher-polluting imports. When he returns to the Dispatch Box, I hope the Secretary of State will do better for UK steelmaking.
Jonathan Reynolds
I have been a Member of Parliament for 14 years, in which I have seen some interesting political events, but I do not think I have ever heard a contribution with such brass neck. That is quite something, because there is quite a menu to choose from.
Let me explain what I was doing during polling week, in the lead up to 4 July. Parliament was not sitting, and I was shadow Secretary of State. I was going between key seats, as would be expected, negotiating with unions, Tata, my colleagues in the Welsh Government and every relevant body to prevent action that would have resulted in the entire closure of the Port Talbot works on polling day. It was as though the Government had already gone; they were not on the pitch. The first thing I had to do, before I even became Secretary of State, was ensure that there was something there to save, because it would have gone under the Conservative party. [Interruption.] Conservative Members really need to listen, because my contributions are factually accurate, and I will help them to understand the real situation.
The point of the new investment is to save jobs. There will be better terms for the people who are unable to get the new jobs, including better cushioning during their retraining for entry into the rest of the economy. I have explained why it is a better deal, as I hope the shadow Minister has seen. He mentioned media reports; they have not come from my Department, but I appreciate that there were lots of interested parties. The unions and the Welsh Labour Government recognise that this is a better deal. I hope that the Conservative party recognises, on taking a step back from the statement, why the deal will make such a difference.
The shadow Minister mentioned virgin steel. Let me talk about my frustration about that. He will understand that the two blast furnace sites, Scunthorpe and Port Talbot, lose a great deal of money every day. The managers are so fed up with the lack of action under the last Government that they have put timescales on their closure. The simple truth is that I do not have the timeframe that was available to the Conservative party. Moreover, when it comes to Scunthorpe, I do not yet have the carbon capture infrastructure in place that will be necessary for the ideal solution. I would love to be a position to look at the hybrid solution that the shadow Minister put forward—keeping the blast furnaces open while we bring the electric arc furnaces online—but all the time that could have been used to work on that was during the Conservative Government, and they did not do that work. There are therefore far fewer options available to us, and the situation is far more challenging.
Since I became Secretary of State, I have had many meetings with the UK management about Scunthorpe, and have had three meetings, I believe, with Mr Li, the principal shareholder. I also met him when I was shadow Secretary of State. We have been clear that we want a transition in Scunthorpe, and want to put up Government money alongside what the company may offer, but that has to be part of a transition to the future. The workforce and the route that is offered to them has to be part of that.
Even if we are successful in doing that, my frustration is that the options available are very difficult for the area. The solution I would ideally deliver, which could have been delivered by the Conservatives in those 14 long years, is not available. When Conservative Members leave the Chamber today, I hope they reflect on the mistakes they made, their lack of action, the legacy they bequeathed us and, fundamentally, the improvements we have been able to make in such a short time.
Oral Answers to Questions
Greg Smith Excerpts(3 months, 2 weeks ago)
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Greg Smith (Mid Buckinghamshire) (Con)
What we have this morning is another chapter in the growing theme of what the Government said before the election and what they are doing after the election being entirely different things. The Chancellor of the Exchequer talked in May about reliance on Chinese EVs undercutting British workers and leaving us exposed, but by July she was talking about the benefits of trade with China. What we have seen in this Chamber this morning is that, while the rest of the world—the United States, Canada, the European Union—is acting on Chinese dominance in the EV market, the United Kingdom Government continue to dither. What is it to be: clear action on behalf of the UK automotive sector, or continued dither and failing to make a decision?
Sarah Jones
I do not know whether the hon. Gentleman is aware that until recently his party was in government, and inward investment from China grew over four times since 2014, so I will take no lessons from him on these issues. The automotive industry, which I work with closely and meet regularly, has not asked for what he suggested—